Releasing Equity From Your Home
There has never been a better time to consider equity release. The market is more competitive than ever before and as a result interest rates on equity release schemes are at an all time low. The right equity release specialist should be able to search the whole market to find the most suitable equity release plan for you.
Making Your Retirement Years Better
After paying off your mortgage for all those years wouldn’t it be nice to be able to use the equity you have created without the inconvenience of downsizing or relocating? That’s exactly what an equity release loan does. There are three kinds of equity release scheme available, with variations on each. The lifetime mortgage and drawdown lifetime mortgage involves taking out a new loan secured on your home; while a home reversion plan involves selling all or part of the ownership of your home. In return each plan will pay you a lump sum or a regular income.
Types of Equity Release Schemes
With Lifetime Mortgages and drawdown lifetime mortgages the main features are:
- The money you get is secured against the value of your home
- The money is paid out in a cash lump sum or a regular income
- You continue to own and live in your home until you die, or your spouse dies, whoever lives longest
- Interest is charged but this is added to the value of the loan so that the amount of the original loan will therefore rise over time
- The loan and the interest charges are repaid when you die
Most equity release schemes come with a no negative equity guarantee, which means that you can never owe more than the value of your home, even in the event of a drastic market slump. The home reversion plan differs to a lifetime mortgage in that you actually sell your home (or part of it) but carry on living it for as long as you live.
Getting An Equity Release Lifetime Mortgage
To qualify for an equity release plan the minimum age is generally 55 with a property worth at least £50,000. But usually you have to be 65+ for a home reversion plan. Also you must be able to clear any outstanding loan secured on the property out of the money you are releasing.
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