1.    Lifetime mortgage

With this one, the borrower’s home is the main security. In other words, your mortgage is the main security against which the money is released by equity release companies to your account every month or in the form of a lump sum.

The payments, determined through use of an equity release calculator, are made in terms of interest added to your capital. This goes on throughout the duration of the loan. It is then repaid when the borrower dies or moves out of his home into a care home. While living in the home, the borrower retains its ownership. He is also responsible for taking responsibility of the home in terms of costs of owning and taking good care of it.

2.    home reversion

With this equity release UK arrangement, part of the home is sold to a third party. The third party in this case is an individual or a reversion company. In this case, the implication is that somebody else owns part of the home in terms of value. The borrower gets incomes in return for this type of arrangement.