Why should I apply for an Equity Release Scheme?
The right equity release scheme could mean the difference between a comfy retirement and a constant worry about paying the bills. Sadly, lots of retired people face a substantial drop in income, which often means that they have to consider downsizing their home and moving into something cheaper to afford a more comfortable lifestyle. An equity release scheme allows homeowners aged 55 and over to significantly boost their income by raising a large sum of money or regular income without having to sell their home and without having to pay rent or loan repayments.
Recent data from the UK’s leading debt charity the Consumer Credit Counselling Service says that the over 60s are now the fastest growing age group with financial worries. If you’re unfortunate enough to fall into this category, or you’re simply looking for a cash boost to do the things you’ve always dreamt of then an equity release scheme could be what you’re looking for.
Key benefits of an equity release scheme
Perhaps the most notable benefit of an equity release scheme is that you can choose to release the equity from your home in a cash lump sum or regular payments. Whichever option you go for, another significant benefit of your equity release scheme is that the money you receive will be tax free.
An equity release scheme can be a safe and practical way to turn some of the value of your home into real money. With most types of schemes you remain the homeowner and you won’t be tied to regular repayments as you would with a standard mortgage.
Am I eligible for an equity release scheme?
Although equity release schemes offer many benefits you need to be aware of what impact releasing equity will have on your estate over time and whether or not your entitlement to means tested benefits could be affected.
It’s important to note that you must be able to clear any outstanding credit secured on the property from the equity you release.
In most cases you will qualify for an equity release scheme if:
- You & your partner are aged between 55+ (65 if you’re considering a home reversion plan)
- You are a homeowner with little or no outstanding mortgage
- Your property is worth approx £50,000 or more
If you’re thinking about applying for an equity release scheme then it’s important you choose the right plan. The first step is to seek advice from independent equity specialists who will look at the entire market and help you decide whether an equity release scheme is for you.
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What charges would I incur should I decide to sell my home at a later date (to move into a private care home, for instance?
[Reply]
admin Reply:
November 17th, 2009 at 5:31 pm
Hi Trevor,
In summary…..
With a lifetime mortgage, if a client moves into long term care there would be no penalty as these products waive this fee.
Charges are only payable should a client choose to make an early repayment or if they do not transfer the debt to a new property. The payment required would be the monies borrowed plus interest and possibly a closing admin fee with a lifetime mortgage, plus charges if applicable.
However, for a reversion product this is a little harder to calculate and involves a sale of the property to which the client has to repurchase their property at the full market value and this is if the lender agrees.
For more information please do not hesitate to contact age Partnership.
Kind regards
The Age Partnership Team
[Reply]
Trevor Draper
16 Nov 09 at 7:26 pm