Anyone who owns a property outright and needs capital from it hears mainly one kind of offer: equity release. Lifetime annuity, part-sale, reverse mortgage — the models carry different names, the underlying idea is the same. You give up ownership and receive money for it.
Annuity models (equity release, part-sale, reverse mortgage) cost you ownership; taking out a loan against the property costs you interest. With a loan, you remain the full owner, the bank registers a charge and pays out a sum you repay with interest, and the property passes to your heirs in full, less the remaining debt. With a lifetime annuity, ownership transfers immediately and is generally lost to heirs; with a part-sale, running fees apply and the buyer participates in future value growth. An annuity route makes sense mainly when a loan is no longer viable — for example without income to service a repayment, or with a property that is hard to value. Otherwise, borrowing against the property is usually the cheaper path, and it is also a way to raise the equity needed for a property purchase abroad without selling anything in Germany first.
There is a second route, advertised less often because less is earned on it: you keep the property and borrow against it. Which of the two is right is not a matter of taste — it depends on whether there is an income that can carry a repayment, on how easy the property is to value, and on whether anyone is meant to inherit.
You sell a share, stay living there and pay a usage fee on the share sold. That fee is not a repayment — it reduces nothing. On an eventual full sale the buyer participates in the increase in value, and an exit fee is usually charged.
You transfer ownership in full and receive a right of residence plus a running payment. The amount depends on your statistical life expectancy. For the heirs the property is generally lost.
A charge is registered, a sum is paid out, and you repay it with interest. You remain the full owner, and the property passes to the heirs less the remaining debt.
Equity release costs ownership; borrowing costs interest. Everything else follows from that. Where an income exists that can carry a repayment and the property is straightforward to value, a loan is almost always the cheaper way to reach the same capital — and it is the only one of the three that leaves the property intact. Where no such income exists, the annuity models are not a worse choice but the only remaining one.
The mortgage readiness check shows in a few minutes whether the loan route is realistic in your case.
Most owners who ask this question are not looking for income — they are looking for equity for a purchase in Spain or Portugal. Raising the capital before you negotiate turns a buyer subject to finance into a cash buyer, and on a fast market that is frequently worth more than a fraction of a percentage point on the rate. How that structure works, and where it fails, is set out under using a German property as security. Where the property to be charged is in Spain rather than Germany, the rules are different again: releasing capital from a Spanish property.
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