What is Equity Release?
Equity release refers to a selection of products which allow you to get the equity (money) tied up in your house when you're over age 55. It is possible to take the cash that you discharge as a lump sum or, in many smaller quantities or as a combo of both.
Types of Equity Release
Lifetime Mortgage: A Lifetime Mortgage is where you would take out a mortgage secured against your primary home while retaining full ownership. You may choose to section off some of the worth of your property as an inheritance for your dependents. You can decide to make repayments or let the interest accrue. The borrowed amount and any interest would then be paid back when you die, or you enter into long-term care.Home Reversion: A Home Reversion is where you would sell a part or all of your home to a "Reversion Provider" for which you would then receive a lump cash sum or regular payments. You would then have the right to continue living in the property until your death. This would be rent-free, but would still have to be cared for, maintained and insured by yourself. You can choose to keep a percentage of the property for inheritance purposes. The percentage of the property that you hold would always stay the same regardless of its changing worth. When reaching the end of the plan, your property would be sold and the amount made would be shared according to the percentage split of the property ownership.
Things to Consider
When you decide to take Equity-Release, it is essential to make the right choice; as the financial benefits now might not put you in the best position later on in life.
Equity Release can be more expensive than an ordinary Mortgage; as interest amounts can be higher and debt can increase quickly. Safeguards need to be put in place to ensure that certain factors do not negatively affect you financially. These include Negative Equity Guaranties and Fixed Interest Rates.
Get the best Advice
If you are thinking about taking out Equity Release in the form of the above, make sure that you ask one of our qualified advisers beforehand.
The financial adviser will take into consideration your exact financial situation and then suggest the best course of action for you.
When carrying out this task, they will research available products necessary for you.