Which One to Choose: Equity Release or Lifetime Mortgage
When you are looking for a way to free up some cash after retirement, there are many options available. One option is equity release, which allows homeowners to make use of the equity in their property and get money without selling or moving home. Yet another option is lifetime mortgage – this type of loan enables homeowners with low incomes to borrow against the value of their property so they can continue living in it. The difference between these two loans is that one will provide you with a lump sum while the other provides an income stream for life. Equity release lifetime mortgage, which one to choose?
Take into account your current situation and goals when making your decision. If you need the lump sum now and you only need to borrow a low amount, then equity release is the better option. On the other hand, if you want an income stream for life or your property has more than £30k in value – lifetime mortgage would be best.
Equity release works better for people who want to use the lump sum for a large purchase, such as buying a new car or home. Lifetime mortgage is better if you have low income and want an income stream over time.
Lifetime mortgage is better when it comes to lower risk; Equity release is better when it comes to higher returns.
Another difference to note is the timeframe. With lifetime mortgage, you can borrow money today and live on it for life while with equity release, you get a lump sum now but then need to come up with an alternative at some point in the future.