With property prices booming in recent years, you may be sitting on a goldmine! Why not release some equity so you can have the things you've always promised yourself.
With property prices booming in recent years, you may be sitting on a goldmine! You could release equity in your property to pay off those expensive loans, credit cards and other debts to save you money, or you can start on some of those home improvements that you have talked about for years, get that new car, or even take that long overdue dream holiday - WE CAN HELP.
Equity Release is a means of using the value of your property to receive either a single lump sum of cash or regular monthly instalments.
There are two types of equity release on the UK market, these are
Mortgage Plan
Home Reversion Plan or now known as a Lifetime
Mortgage
With a normal mortgage plan a client would remortgage their property to release enough equity to pay off short term debts i.e. loans and credit cards and in most circumstances their cash flow would improve greatly by putting short term debts that are normally attracting a high rate of interest repayable over a longer term on a secured basis that should attract a much lower rate of interest then you would normally see on unsecured credit.
In respect of Lifetime Mortgages this type of scheme is normally attractive to people who have retired and find that they are struggling to meet their everyday bills and look to use the equity in their property to improve their lifestyle. This type of mortgage allows the client to take a lump sum and or income from their property. The principle lenders in this market place offer a negative equity guarantee to ensure that in the event of property prices falling the clients will not loose their home. Some of these schemes allow clients not to make any payments on the money that they borrow and to roll up interest until the property is eventually sold. This type of scheme would involve a family solicitor to ensure that the client fully understands the scheme and the implications in the long term to the equity left in the property which would normally go to the children.
Important factors to consider:
* When choosing an equity release ( lifetime mortgage ) plan, ensure that it has negative equity guarantee. This means that in the event of the value of your property decreasing, the debt will also decrease, in addition, this will ensure that any outstanding debt, after the sale of your property will not be passed on to your next of kin.
* Not all lenders will allow you to move home after you have taken out an equity release plan ( lifetime mortgage ).
* If you are living with a partner, you must take out a joint plan to ensure that the debt will only be reclaimed after the death, or admittance into long term care, of the last surviving partner.
* There can be hidden charges, such as; legal fees (as a solicitor is needed to set up the equity release plan), you will be charged for the surveying of your property. There are also charges for the setting up, maintenance and redemption of the loan.
* You retain full ownership of your home until your death or admittance into long term care.
