Would anyone please be able to explain in very simple terms how releasing equity from a house works

[bizzey]

My Parents have talked about this for a while ,but I just don't think it is as simple as what the TV ads say !!

Is there a minimum amount they can have

Do the "company" give the money and then it is paid back with interest when house is sold ...which could be quite a few years hopefully .

Would my siblings and I be liable to pay back this money even if the house was not sold on their deaths?

I know if they go ahead we will get a good Financial Adviser on board and stuff,just I need to explain all the jargon in simple terms to them first to make sure they understand.

The money is to give me and sibs some now so it is a positive for me ...just need to know long term what it means .

Thanks

[Milliways]

Aviva have a good FAQ page on this here which may help?

It works like a mortgage so house would have to be sold unless you can clear the debt yourselves on their deaths - the company will have a charge over the property.

[Rockchick1984]

Different companies will have a min and max amount they will lend. It's easier to think of it as a lifetime mortgage - basically they are taking a mortgage out and it will accrue interest but they don't have to make payments on it.

When they die or have to go into long term care the amount borrowed plus interest must be repayed - usually through selling the house, although if you or one of your siblings wanted to pay the debt off then you could do so that the house doesn't need to be sold.

Make sure they choose a company who guarantee they won't take more than the property value even if the interest accumulated should take it to more than that. Alternatively if your parents have a good income but want a lump sum, they could make repayments of the interest amount so the total amount owed is still just the amount they borrowed.

[bizzey]

Thank you both for your replies and Milliways for the link.

It has really helped clear things up.