Equity release is a process which refers to retaining an asset that has capital value, while the owner enjoys a steady flow of income from the said asset, owing to the capital value of the assets. This is normally done for house and property through which you can earn income, but with a condition that the income provider must be repaid at a later stage after the demise of the home owner.

Equity release scheme is preferred by elderly who have no intentions of leaving their estate to any heir or cannot, after their demise. A common form of equity release in the country is also known as a reverse mortgage. A reverse mortgage is a type of loan which is provided to elder people who are not charged any monthly mortgage payments but are responsible for paying all property taxes and homeowners insurance. The loan payment is deferred without any problems for accessing the home equity. The interest component for availing the mortgage is added back to the loan balance which in time increases the value above and beyond what can be recovered from the home at that stage.

The advantages of equity release include:

The lump sum amount which you will receive as part of the equity release is a tax-free form of annuity return one can say. Income tax takes out a major chunk of your income and thus this tax-free benefit can prove to be quite handy.

Estate owners have to pay inheritance tax which is a tax paid when the heir of the estate owner inherits any property or the estate from the said owner. This can be quite a substantial amounts and the big advantage is equity release helps reduce the amount of inheritance tax that needs to be paid.

The housing market conditions influence the prices which keep fluctuating and thus there is no sure guarantee of good returns. However, with equity release, there is a no negative equity guarantee that will protect the borrowed from these fluctuating prices which can affect the overall value of the estate or property.

Borrowers are free to refinance their mortgage a minimized cost with other finance providers owing to fluctuating interest rates. This is a big benefit when it comes to equity release.

As mentioned earlier, equity release will enable the owner (borrower) of the home or estate to reside on the same property without worrying about repayments during the tenure of their stay up until their demise.