The How To’s of Equity Release Mortgages
What happens when you want to retire, but you aren’t financially prepared? Perhaps your company is retiring you or your significant other has decided to retire, or else you just need to finally take your break. But sometimes when the time comes, people don’t have enough money to be able to truly enjoy their retirement.
Equity release mortgages are often used as the solution to this problem. With equity release, you get the value of your home steadily paid to you by a loaner. It’s the easiest way to be able to enjoy your retirement and afford to achieve your dreams. When the loan period is up, your house can simply be sold and the money used to repay the lender.
Why Release Equity?
There are many reasons besides just retirement that a person would want to go ahead with an equity release mortgage. For instance:
- Money for their health care is too scant, and they need a better way to fund medicine and hospital fees.
- They want to be able to improve their home while they still live in it.
- They want to get their children (or grandchildren) something special for some reason. College educations or new houses are often funded through equity release schemes.
- They just want to treat themselves before the end of their lives.
Qualifying
To be able to get an equity release mortgage you usually have to be over 60—though sometimes being 55 or older is acceptable. You also have to have a property that is in good condition and which will make the equity release scheme worthwhile for the lender. You also have to own your home completely or almost completely by the time you apply for the mortgage. Finally, you have to prove to the lender that their investment will be worthwhile by showing that you are a responsible and wise homeowner. An independent financial adviser such as www.equityreleasesolutions.co.uk will be able to help with advice.
Types of Schemes
There’s not just one type of equity release mortgage—there are actually 5. These 5 might be appropriate for you depending on your preferences and your personal financial needs. The schemes are as follows:
- Home income plan
- Lifetime mortgage
- Home reversion scheme
- Shared appreciation mortgage
- Interest only scheme
Check each of these out before making a final decision. And be prepared: each one of these main categories might have many sub-plans within them, depending on the company offering them.
Remember:
An equity release mortgage is a serious decision, and one that will have financial repercussions later on in your life. By taking one out you could be reducing the amount of money you have left to leave to your children as an inheritance. There may also be extra fees and bills charged to you depending on the lender, so take these into account. Finally, if you don’t really know what you’re doing, you can always ask for the help of a solicitor and get the advice that you need. Equity release is a great plan for those who need it, but if you don’t understand it fully then you might be making the wrong decision.