An equity release entails taking some cash out of the equity that you have in your home. There are two primary ways to do this: a home reversion plan or a life-time mortgage. An equity release comparison begins by looking at the key differences between the two.
The first part of the equity release comparison is in terms of interest calculations, a lifetime mortgage is charged with interest based on the percentage of the advance given against the home. This works in much the same way that any other loan does. With a home reversion plan, interest is null. This is because the lenders assume an equal share in the ownership of the property. Interest rates rise and fall. In a lifetime mortgage, generally-speaking, the borrower pays interest at a fixed rate. Again, with a home reversion plan, there is no worry in this regard because there is no interest to begin with.
The second part of an equity release comparison consider the protection that a borrower has against a falling property value. In a home reversion plan, the loaner/lender shares the risk of falling property value. With home mortgages, depending on the deal, there is protection against a falling property value.
As for inheritance, it is clear that a mortgage comes up on top, assuming that the homeowner is keen on leaving something behind for his loved-ones. This is the final stage of an equity release comparison. Overall, a mortgage equity release is just better in this regard. It means that the loved ones of the deceased have a property asset, and potentially cash-free tax depending on when the equity was released. The same cannot be said for a home reversion plan. This is because the lender owns the portion or entirety of the home from which the equity is released.
Of course, different banks will provide different rates and plans, but, ultimately, they will follow the same basic template. Both of these have value, but it is clear that a lifetime mortgage is the more altruistic of the two equity releases. This comparison should help you to make an informed decision.