Advantages of Equity Release

Article Written By: Regina Falangy

Equity release is gaining wide spread popularity amongst senior citizens all over the world. This is because with equity release scheme, people aged 55-95 can release cash from their home to spend in any way they wish allowing them the opportunity to enjoy their retirement years to the full.

Popular uses of equity release include home improvements, holiday and travel or simply a way to relieve the stresses and strains of day to day finances and expenditure.

There are three main types of equity release schemes, each with their own advantages and disadvantages. They include:

Lifetime mortgage:

A lifetime mortgage allows you to borrow an amount of money secured against the value of your home. Interest is then added at a fixed rate each month. The loan and accumulated interest are repaid when the property is sold up your death or entry into long term care.

Home Reversion Plan:

A home reversion plan allows you to sell all or part of your home to the provider in exchange for a cash lump sum. Both you and your partner have the security of being able to remain in residence for your entire lifetime. The property reverts to the provider upon on your death or move into long term care.

Drawdown Lifetime Mortgages:

A drawdown lifetime mortgage allows you to take a regular monthly withdrawal of ad-hoc cash withdrawals. It also allows you to take a combination of both methods.

Some of the most important features of this scheme are:

- You can receive eceive cash lump sum or regular monthly withdrawals.

- You'll be able to enjoy spending your money the way you want.

- You have the freedom to choose the monthly payments

- Stay in your home for life, or as long as you like it.

- Entitlement to state benefits may be affected.

- The value of your estate is reduced.

As you can see, this is a big financial decision making it paramount that you seek specialist advice from an independent adviser first. They will search the market for you to ensure that you are getting the best equity release deal to suit your circumstances.

All advice given will be tailored to your needs and requirements and all queries can be answered in full to enable you to make a fully informed decision about whether a scheme will be of benefit to you.

It is very important that you only seek equity release schemes that are Safe Home Income Plan approved. This guarantees you never fall into negative equity (i.e. you never owe more than what your house is worth), can stay in your home for life and move home if you wish (subject to criteria).

About the Author

Rachael Niklas - Find more information about Equity Release and Equity Release Calculator

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