The Equity release route seems to be the golden path as more people prefer it. Maybe because of the low pension rates, a rise in retirement age and an increase in life expectancy.
Whatever your reason, getting knowledge before going down the equity release path is imperative.
In the past year, equity release lending grew by 77% according to the Equity Release Council. The council cites real-life customer needs as the leading cause for the rise. Sweet as the deal seems since many people are signing up, don’t forget to consider both sides of the coin.
Also, remember to understand the type of equity release:
It will allow you to have a loan by securing your home, but you’ll still be the owner. What happens is, after you die, the debtor sells your home, and that pays your debt. Many people are going for the lifetime mortgage even though it’s extra expensive.
You can sell part of your home to a reversion provider to get a one-time sum, or an agreed on a regular payment plan. Though cheaper, the home reversion is not a favourite type of Responsible Equity Release.
Top ten reasons to choose equity release
1. There is no negative equity guarantee
When you sign up for a Lifetime Equity release, you’re not reliable for any extra or outstanding fees even if the cost of your property doesn’t meet the debt at the time. In other words, whatever happens, your debt remains the value of your home, no matter what its value is.
2. You can live the life you want
The retirement dream doesn’t pan out when the reality of finances hits you. A lifetime equity release helps you live the life you wish for your retirement days to spending days relaxing in the sun and going on cruises.
3. You won’t have to downsize
Being asset rich and cash poor can dampen your plans for retirement. It could mean moving from your home to get some money. However, with an equity release, you don’t need to leave the comfort of your home. You’ll stay until you die or move to a care facility.
4. Determine the way you pay back your mortgage and outstanding debts
Your regular source of income ceases after retirement which makes it hard to keep up with debt and mortgage payments. However, an equity release of your property allows you to live stress-free and your debt paid when you die.
5. You have the right to your property for life
Once you take out a lifetime equity release on a home, for as long as you live, it remains your property. Not even your lenders have a right to claim the property until you die or permanently move to a care facility.
6. Enables improvements and expansions on your property
If your retirement plan entails having your entire family lie with you, an equity release will help you access funds that will allow you to expand and improve your current home.
7. Get the amount you want
Once you retire, getting conventional loans and mortgages is tough since there are terms that lock you out of these loans. However, an equity release gives you a lump sum at once.
8. You can financially support your family
A living inheritance for your family is possible with a lifetime equity release of your property.
9. You can supplement retirement income
With your regular income line cut off, you need a plan to make ends meet, and an equity release is that plan.
10. You can pay off an interest-only mortgage
Using an equity release to pay off an interest-only mortgage means that you’ll have no monthly payments to make.
The advantages of getting an equity release are that it gives you options to live life the way you want after retirement.