Key takeaways from BBC’s discussion on unlocking property wealth
Written in line with our editorial policy.
Equity release was recently featured on BBC One’s Morning Live. The segment explored how equity release could provide a lifeline to homeowners aged 55+ struggling with limited savings despite owning valuable homes.
With house prices continuing to rise, but household budgets under pressure, the presenters acknowledged that equity release could be an attractive option for some people. However, the programme stressed the importance of making an informed decision, as equity release is a significant financial commitment with long-term implications.
During the 3 October segment on Morning Live, both the main types of equity release plan – a lifetime mortgage and a home reversion plan – were summarised by finance expert Laura Pomfret.
When discussing the most common option, a lifetime mortgage, Laura explained how homeowners can opt to receive a lump sum or smaller payments over time. She also talked about how interest can either be paid regularly or allowed to ‘roll up’. Leaving interest to roll up means that as well as the loan itself, the accrued interest is repaid when the homeowner either passes away or moves into long-term care. This is typically funded through the sale of the customer’s property.
The less common alternative, a home reversion plan, was also discussed. This option allows homeowners to sell a portion or all of their property to the provider, with the provider paid back via the proceeds of the sale of the property. Again, this happens when the customer passes away or moves into long-term care.