What is Equity Release
For many, the term Equity Release is one that’s been heard before but perhaps not fully understood and how it affects them.
To put it simply, if you are a homeowner aged 55 and over then Equity Release is available to you. It give homeowners a range of options that access tax free funds tied up in their home.
The two types of Equity Release plans are Home Reversion Plan and Lifetime Mortgage.
The most common option regarding Equity Release is a lifetime mortgage.
This allows home owners to borrow money that is secured against their property. The mortgage is usually paid in full from the sale of the property if the homeowner moves to a residential care or passes away.
A home reversion plan is when money is raised by selling the entirety or part of the property while continuing to live there. this is until they move to residential care or pass away.
How does it work?
Going for a lifetime mortgage is a way to fund your retirement by having money tied up in your property. Enquiring with your Mortgage Adviser will help as they can let you know the amount you can borrow depending on your choice of plan.
It’s best that you sit down and discuss your future plans and current financial situation with your Mortgage Adviser.
Why do people go for Equity Release?
- To make improvements on their property or alterations for accessibility.
- To supplement income or pension
- To buy a new car
- To go on holiday
Benefits of Equity Release
- No need to downsize, you can still live in your home
- Gives you financial freedom. The money released is yours!
- Drawdown – you can receive your payment in one or on in regular instalments to fit you and your income
- You gain the benefit of a house with increased value
- It’s transferrable and if your circumstance changes you can still move
Proceeding with Equity Release is an important topic to discuss with your family and close ones as it depends on your current circumstances and the plan you have for the future.
In addition to this, discuss this option further with a financial adviser for further clarity.