How does Equity Release work?

[Ramises]

I'm based in Ireland, and just discovered that my mother has been paying interest on an equity release she took out on an investment property. She took out the equity release to assist me with funding a renovation of my house, but I thought there was no interest due until the end of the load period.

I have googled "equity release" and most descriptions say that the capital sum plus interest has to be paid at the end of the term i.e. no monthly interest payments. Is this correct, and if so, what should I advise my mother in relation to her situation?

I'd appreciate some guidance, as its all a bit confusing.
Thanks
Ramises

 

[NorfBank]

It is confusing.

There are three different types of equity release:

1) Home reversion scheme - here you actually sell a part of your home

2) Lifetime loan - here you get a loan to be repaid on death - interest rolls up, full sum not payable until death.

3) Normal Equity release - here you get a mortgage against your property and start to pay interest immediately - it is just like a normal mortgage.

As far as I know 1 and 2 can only be taken against a residential property so it looks like your mother took out number three.