You’ve just retired and are looking forward to going on that trip around the world with your spouse, but your pension and savings aren’t enough.
Well, lucky for you, you may be eligible for one of the best financial inventions of time – equity release.
However, in spite of the incredible nature of this scheme, it involves several processes that you need to follow keenly to get the best out of it, and this guide will help you navigate through these processes.
If you’ve heard about this scheme but aren’t sure about how much equity you’re eligible to, be sure checkout Sovereignboss and use their equity release calculator and start planning for that world tour today!
Equity Release Explained
Equity release, in a nutshell, is a way of releasing the wealth tied up in your property without having to move or selling it out, which you can do via series of dogmata that allow you to access – or ‘drawdown’ equity (cash) at a later date, based on your necessities, and if you are over 55.
You also know that you need not have ultimately paid off your mortgage to do this.
As a rule, however, you are allowed to take the money you release in one lump sum, in some smaller amounts on which you will pay interest, or as a combination of both. The “catch” though, is that one has to repay the income provider at a later stage, which is, at most times, when the homeowner dies. Therefore, equity release is, mostly, beneficial to the elderly who do have any intention of or are can’t leave a large estate for their heirs when they die.
Who Can Get Equity Release?
For you to take out equity release, there are conditions you need to meet:
- If you want a lifetime mortgage you, (or if you are a couple and are borrowing jointly) you need to need to be at least 55 years old
- If you want the home reversion to plan you, (or if you are a couple and are taking out a plan (jointly) you need to be at least 65 years old
- Your estate should be in pristine condition and over an absolute value, and depending on the plan provider; there might be restrictions on the type of property acknowledged
- If you, at the time, have a mortgage or a secured loan on your residence you may still be eligible for equity release, but it will be contingent to the value of your estate and the amount outstanding on the current mortgage or loan. You will have to pay off any outstanding mortgages or loans secured against your home at the same time as taking equity release
- Equity release may not be apt if you have dependents living with you. If you have any dependents, they need to take separate legal advice. If the said dependants wish to remain living with you in the estate, then they, depending on your plan provider, may need to sign a waiver confirming they comprehend they have no right to continue living there if you die or permanently move into residential care.
What Are the Cost Expectations?
When you take out the lifetime mortgage equity release, the typical rate is 5.1%, considerably higher than most conventional mortgage options.
In addition to the actual cost of the interest, you will have to pay arrangement fees. These vary depending on the type of plan you choose. Your plan provider can also include costs such as application fees, legal work, and surveyor fees. You might also have to pay stamp duty.
The financial market keeps changing, and you can achieve everything you’ve always wanted to with equity release plans. Don’t be shy. Just take a scheme out today!