Scottish Widows Bank has become the latest lender to enter the equity release market, writes Rachel Williams.
Enabling homeowners over 60 to access capital tied up in their property, the Scottish Widows Bank Home Equity Loan provides a simple solution to older clients that are asset rich but income poor.
The loan, which is secured against the value of the property, is backed by a number of guarantees. Borrowers can live in their home until it is sold either on death, or a move into a nursing home. They can also be reassured they will never have to pay more than the open market proceeds on the property when the loan is repaid, or that the house will be repossessed if the accumulated debt exceeds the property value.
Rob Golbourn, managing director of Scottish Widows Bank, said: ‘Releasing some of the potential tied up in bricks and mortar allows retired homeowners to provide for the future by making use of the value of the property in their lifetime.’
While many will use the loan to boost their income, Golbourn added that some are likely to put the money towards inheritance planning and funding healthcare.
Clients can borrow between 20% and 50% of the equity in their property depending on their age, with an option to make monthly interest repayments, or roll up interest until the loan is repaid on the sale of the property.