Are you retired and no longer drawing a salary? Do you own your home outright or do you have a mortgage that is close to being paid off? If so, you may be a good candidate for an equity release plan. The best equity release schemes allow retirees to borrow money against the value of their home, without having to sell it. Keep reading to learn more about who qualifies for these plans and how they work.
Here are the main eligibility criteria:
Equity Release Plans are eligible for both single and joint applicants. If you are married or in a civil partnership, both parties must be over 55 and named on the title deed of the property. The minimum property value is usually set at £70,000 although some lenders will accept properties worth less.
The amount of money you can borrow through an equity release plan depends on several factors, including your age, the value of your property, and whether you opt for a lump sum or regular payments. The older you are and the higher the value of your property, the more money you will be able to release.
Some equity release plans allow you to make regular payments, while others provide a lump sum. The type of plan you choose will affect how much money you can borrow. Regular payment plans typically allow you to release smaller amounts of money over time, while lump sum plans allow you to release a larger amount of money all at once.
If you are considering an equity release plan, it is important to compare different plans and lenders to make sure you are getting the best deal. Make sure to compare the interest rates, fees, and terms and conditions of each plan before you make a decision. You should also speak to a financial advisor to make sure an equity release plan is the right choice for you.
We can help you find the right equity release plan for your needs. Give us a call today to speak to one of our advisors.
What are the different types of equity release plans?
There are two main types of equity release plans: lifetime mortgages and home reversion plans.
With a lifetime mortgage, you borrow money against the value of your home and make no monthly repayments. The loan plus interest is repaid when you die or move into long-term care.
With a home reversion plan, you sell part or all of your property to a specialist provider in exchange for a lump sum or regular payments. You will still be able to live in your property for the rest of your life.
Which type of plan is right for you will depend on your personal circumstances. Speak to a financial advisor to learn more about the different types of equity release plans and find the best option for you.
What are the risks of taking out an equity release plan?
As with any type of borrowing, there are some risks associated with taking out an equity release plan. These include:
Your property value may fall
If your property value falls, you may end up owing more money than your property is worth. This could mean that your family would have to sell the property to repay the debt when you die or move into long-term care.
You may not be able to move
Some equity release plans have restrictions that prevent you from moving house. This means you could be stuck in your current property even if it becomes unsuitable for your needs.
You could end up paying more interest
If interest rates rise, you could end up owing a lot of money. Make sure to compare different plans and choose one with a fixed interest rate to avoid this risk.
Equity release is a big decision, and it’s important to weigh the risks and benefits before making a decision. Speak to a financial advisor to learn more about the risks associated with equity release plans.
What are the benefits of taking out an equity release plan?
There are several benefits associated with taking out an equity release plan, including:
You can stay in your home
With an equity release plan, you can stay in your home for as long as you like. This is a good option if you want to downsize but are unable to do so because of the financial commitment involved.
You can use the money how you want
You can use the money from an equity release plan for any purpose, whether it’s to make home improvements, pay off debts, or go on holiday.
Your family will not inherit your debt
If you die or move into long-term care and still owe money on your equity release plan, the debt will be repaid from the sale of your property. Your family will not be responsible for repaying the debt.
If you are considering an equity release plan, make sure to speak to a financial advisor to learn more about the benefits and risks involved. This will help you make an informed decision about whether equity release is right for you.