Lifetime Mortgages account for around 99% of all equity release plans and can offer flexibility to meet your needs.
A Lifetime Mortgage is similar in principle to a standard mortgage, with the main difference being that there are normally no monthly repayments to make and the loan (plus the monthly interest owed) is redeemed when you die, or move into long-term care. The amount of value that you can extract from your home tends to be largely influenced by the age of the youngest planholder and the value of the property. As a rough guide there are differing percentages from aged 55 upwards. Broadly, it's 20% of the property value aged 60, 30% aged 70, 40% aged 80 and 50% aged 90+.
Roll-up of the interest owed
The benefit of not paying off the interest as you go along, is that it may free up much needed funds for other use, and it is one less regular payment to worry about. The downside is that the interest is added to the capital that you originally borrowed. To gauge the impact of 'roll-up', if the interest rate for the lifetime mortgage loan is 6%, for example, a £50,000 loan (with the added interest) would have doubled to around £100,000 after 12 years.
Drawdown enables you take out an initial lump-sum to meet your immediate needs and then you have the option to drawdown a further agreed amount at a later stage against set time constraints. About 65% of all plans taken out (by value) opt for drawdown. (Source: Equity Release Council, 1st half 2015 data) The obvious benefit is that it will lessen the impact of roll-up if you don't release all of the money at the outset. There's no point having interest added to borrowings that you don't need at that particular moment in time. An additional benefit is that by taking out your loan in smaller blocks it may enable you to also stay within limits for means-tested benefits. However, do remember that the interest rate applicable when you do drawdown further funds, may be at a different rate. Additionally, do consider products that guarantee the drawdown facility, so that you'll know it won't be an issue whenever you do come to act.
Repaying the plan
In much the same way as with a standard mortgage, there may be an Early Repayment Charge against certain timescales - the terms of which would vary across the providers. As this is a complex area, it's essential that you take advice, so do get in touch to find out more.