Explain equity release and how it enables additional borrowing using a property.

• A. Borrowing against existing equity in a property, through redraw, home equity loan, or line of credit.
• B. Applying for a second mortgage on a different property.
• C. Using grants provided by government.
• D. Selling the property.

Answer: (B)

Equity release means turning the value tied up in your home into cash by borrowing against the property itself. The funds come from a loan secured on the home, so you can access a lump sum or draw funds over time while you continue to own and live in the property. The common ways are to use facilities tied to the current property—such as a redraw on an existing mortgage, a home equity loan, or a home equity line of credit. These options let you borrow more by leveraging the home's value, but they reduce the equity you retain in the property and create a debt that will be repaid later, typically when you sell the home or when the loan comes due.

Using a second mortgage on a different property isn’t releasing equity from the home you live in; it relies on a different asset. Government grants aren’t borrowing against the home, and selling the property would convert the asset to cash rather than provide ongoing borrowing.