If
you are fifty years of age or above and under financial cloud, equity release
allows you to encash your property to lead a comfortable monetary life. Money
received from the scheme help you to carry out home improvement plans, wedding
of a family member, buying a new car, holidays plans, or simply enthuse the
much needed cash flow in your post retirement life.
Unlike
downsizing and selling off, under this scheme you are allowed to live in your
home for lifetime and also gain income from the property that have been built
up over the years.
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Proper diligence before asking for
equity release scheme
However,
while making a choice with the scheme, one needs to be cautious and mull over
every aspect that it might make an impact. Equity release market has been in
criticism in the past years in lieu of being expensive and inappropriate for
many homeowners.
Basically,
equity release scheme is divided into two parts: Lifetime mortgages and home
reversion plans. The qualifying age to avail any of these schemes is fifty
years but it is said that the older you are, better is the chance to benefit
more.
Lifetime
mortgages are also called as roll-up mortgage that is a home loan taken against
your property. The limit on percentage value varies with age and interest rate
is applicable to the amount that is borrowed. Usually the interest is rolled up
if you die, decide to sell the property or go into the care house.
People,
above the sixty five years of age can go for Home Reversion scheme. According
to this scheme, you are required to either sell the entire property or part of
it to the equity release company at lower than market value. You do not have to
pay the interest rate and remain living in the house till the time you die or
decide to move to long term care.
State benefits are curtailed
When
you avail such schemes, state benefit entitlement are reduced, including
medical care. Higher interest rate is charged if you compare it with other
standard home loans. So, if you have other options, equity release might not be
all beneficial for you. You can use your cash savings, down size the property,
or may ask for financial support from family members.
Equity
release reduces the worth of property and family members get lesser
inheritance. So, under such circumstances, you can talk to your family members,
who are the ultimate beneficiaries of your property. Let them know about your
decisions to avoid misunderstanding in the future.
Seeking
advice from financial experts might prove to be of great help as you can compare equity release schemes with
other existing plans and pick the best suitable option available in the market.
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