Do You Have Any Query about Equity Release Scheme?

Most of you would have dreamt of a lavish retirement but when you get into the real world of retirement, the truth might be frightening. When your financial life seems to be shattering, equity release can prove as a Good Samaritan by providing you enough capital to fund a dream retirement.

However, there are some frequently asked questions about releasing equity from house by the prospective as well as existing consumers. Take a look at a few questions that might be running into your mind.

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Question: How safe is equity release?

Answer: This scheme is safe and secured, if you have gathered all the required information about it. There are several rules and regulations enforced by the Financial Services Authority that safeguard the interests of consumers. The most striking thing about equity release is that there will be no negative equity on your house under any circumstances.

Q: How will I know if this scheme is right for me? 

A: The Equity Release Council has made it mandatory to seek advices from financial experts, who have in-depth knowledge of the equity release market. They listen to each and every need of yours and provide a solution accordingly. If anytime during the interaction, they find that this scheme is not good for you, financial advisers will provide you the honest suggestions.

Q: How is the loan repaid and what about inheritance?

A: If you go for life time mortgage plan, your representative has all the right to arrange for selling off the property and repay the loan amount with the rolled up interest rates. Any left amount is retained by your representative or family members. Under the home reversion plan, as you have sold complete or part of your property to the reversion provider, they will arrange for the sale.

Q: Can loan amount be repaid early? 

A: Yes, you can repay the loan amount early; however, you may have to pay some early repayment charges. The amount to be charged varies according to the scheme provider, some may charge for first 5 or 10 years whereas others charge you for the entire term of the plan.

If you have chosen a fixed rate to pay under the interest only mortgage and want to repay the loan early, you may be charged a redemption penalty.

Repaying the loan under home reversion plan is intricate, as you will have to buy back the sold proportion of your house at market value. This might be very expensive and you must not see it as a short term commitment.

Similar to these there are several other queries in the mind of customers. If any query still persists into your mind, feel free to seek a solution from the financial advisers.