Equity release schemes

Home equity release schemes are generally offered by Two types of company, financial services companies and property companies.
With financial services companies the product being offered is typically a mortgage (or home reversion plan) so it assumes you're staying put.
With a property company you have the option of moving or staying...the latter is called a "Sell and Rent Back" arrangement.

Home equity release schemes go by a variety of names.
You might know them as "equity home release", "equity house release", "lifetime mortgage", "equity release mortgage" or "home reversion plan.

How the figures look with an equity release scheme
With the conventional equity release services offered by financial services companies you may be left with nothing. This story details the Which? report that calculated  if a 60 year-old borrowed £80,000 on an average Lifetime Mortgage it could end up costing £256,570 by the time they were 80 and £343,350 by the time they were 85.
The problem with, a home reversion plan, is that generally they involve selling your house to your lender for no more than 50% of its market value.
This story details another equity release tale that had a disastrous outcome.

What are the alternatives? Can you release equity without paying through the nose for the privilege?

• Sell your house
  
Of course there's a big difference in motivation between selling your house because you are moving abroad or divorcing and doing it for financial reasons.
In the end only you can decide what is the best solution for your circumstances. But here are other options.
• Sell and move...
  
Selling your house by conventional methods through an estate agent is one alternative. This can take time, but if you're not in a rush this could be your best option to get the best possible price for your house.
And then of course, you have to move house. Of course you may want to in any event. Perhaps you'd like to downsize?
• ...Or sell and rent back
  
An ever popular alternative is to sell and rent back. This will almost certainly be a cheaper option in real terms and allow you to remain in your house too. An equity release service without the drawbacks.

The advantages of sell and rent back

1. You don't have to move. This means you can have the security of staying in your home. This can be very attractive to families with young children or older people who are very established in an area or have relatives close-by.
    
2. Would like a break from homeownership - perhaps with a view to being a cash buyer next time round.  If your aim is to find another house to buy perhaps because you are downsizing this may well suit you. And possibly with no future mortgage either.
    
3. You have other uses for your capital. This could range from paying off loans to simply wanting to enjoy your money or for investment purposes.
   It's not unusual for people setting up a business to use the equity in their homes to do so.
    
4. If you are facing repossession and want a fresh start, a sell and rent back arrangement could allow you to maintain a clear credit record by releasing equity, preserving your credit rating and get your lender off your back.
    
5. Are you finding it difficult to cope with higher interest rates. If this is your only reason for wanting to sell, a rent back arrangement might be attractive.
   Particularly if you'd like the opportunity to buy your property back in the future when interest rates start to go down. In a way, this is a means to protecting the profits you have already made on your property. It also means that your house can ultimately stay in the family.
    
6. Release equity in such a way that you have substantial capital left-over to leave to other family members.
    
7. All the maintenance, insurance and upkeep of the house is now your landlords concern, leaving you free from worry over possible property problems and costs.