For people going into retirement, there might be some unfortunate financial questions about how they will afford life after working. If they have investments, such as they own their own home, there are products that can help. It is important, however, to ensure that when looking for these products, consumers are well advised and understand what they are looking for.
What is a lifetime mortgage and how is it different from an equity release scheme? This is a common question.
Starting with the equity release scheme, it is useful to define what that actually is. To release equity is to take value out of something that is owned, and turn it into cash. Equity release schemes are products with structured ways to do that.
One of those ways is through lifetime mortgages. This is one of the most common equity release schemes. It is basically a mortgage for people over a certain age. The final payment is intended to be paid once the house is no longer required by the owner, and is a part of any arrangement to pass onward, including a sale if the owner wishes to downgrade.
Essentially, a lifetime mortgage is a type of equity release scheme that is available to retirees. It is tailor suited to the needs of retired people looking to release the value stored in their properties.
