Equity release allows the individuals who are asset/property rich but cash poor to draw on their house’s value in their retirement by taking a loan repayable after their passing.
What Is Equity Release
- Equity release enables the people to draw on their house’s value without moving; however any money released through this way must be reimbursed with interest after you die. It enables the people to release value in their house to pay routine bills and remain in it in the meantime.
Types of Equity Release
(1) A lifetime mortgage
(2) A home reversion plan
Both have their own pros and cons, but eventually what it means you can stay in the house until you pass away.
Important Points to Consider
- Downsize: First of all, consider all the available options like moving to a smaller house and other. Because fund raised via this way will cost you much less in moving expenses as compared to equity release set-up interest and charges.
- Seek Family Support: If you really don’t want to move, it is essential to talk about your plans with your family members before progressing with equity release. This will help you avoid unnecessary family disputes/surprises later on.
- Get Professional Advice: With numerous equity release plans accessible it will be hard to locate the best possible deal yourself. So, find an independent and professional equity release advisor.
- Only Borrow What You Need: Borrow just as much as you mean to spend or give away. You will acquire substantially less from money left on store than the premium you should pay for obtaining it in any case.
- Focus to the APR: When comparing lifetime mortgage interest rates keep your focus to the APR (annual percentage rate) which considers the total cost of borrowing.
- Get Legal Support: You will need a solicitor as well.