If you are over 55 you may be considering your financial position and looking at ways to increase your income. An option for homeowners over 55 is equity release. This is where the cash tied up in your home is released, either as a lump sum or over a few smaller amounts.
Read on to learn more and find out whether equity release could work for you…
As a homeowner you are likely to have considerable equity tied up in your bricks and mortar. With an equity release mortgage or scheme, you can release this equity to use as you wish and continue to live in your home.
There are two equity release options to choose from:
Through this option you can access the equity of your home while still retaining ownership. A percentage of the value of the property can be ring-fenced for your family to inherit when you die, and you can opt to make repayments should you wish.
In the event of your death, or if you enter long-term care, your property is sold and the loan amount, plus interest, is paid back to the lender.
With this option you will receive either a lump sum or regular payments in return for selling part, or all of your property, to a home reversion provider.
You will be able to live in the property, rent free, until you die, and you can also ring-fence a percentage of the property which can be used as inheritance.
After your death, the property is sold, any ring-fence amount is distributed to beneficiaries and the home reversion provider gets the remainder.
To qualify for an equity release scheme, you will need to:
While not for everyone, for those that equity release is right for, the benefits include:
Equity release may not be the best option for you and it is always worth taking independent financial advice before you commit to anything. If you decide it is not a viable solution for your situation, but still wish to raise funds and make your home work harder for you, there are other options to explore, including:
There are legal rights in place designed to offer protection to homeowners who have opted for equity release. This includes the right to buy back your home should you choose to. A complicated process, buying back your property can be expensive thanks to accrued interest and early repayment charges. Seek professional advice before proceeding.
If you do decide to proceed, choose a provider who is a member of the Equity Release Council(ERC). As part of their membership, providers must follow the ERC’s code of conduct, which includes a promise to treat customers fairly and act with their best interests at heart.
Dealing with all aspects of moving and selling, at Smith Partnership Move we are experts in property, contact us on 0330 123 1229 for further information.