Equity release is a popular way to convert the equity (that is, assets minus liabilities) of your home into cash. This is a system whereby you will be paid an amount that is part of your home; in return they will take possession of your home or whatever you owe to them, including the interest, at the time of death. This is an ideal deal for old people, who have retired from active service and are nearing the end of their days.
Equity release helps one to supplement one's monthly income or pension. It can serve as a good option to take care of your needs, such as shopping for important items, buying a new car, financing holiday trips etc. There are several schemes of equity release, although some of them may be difficult to decide upon. You may require professional services of a financial advisor for the same. For your information, a few of the more popular ones are Home Reversion, Home Income Plan, Interest-Only Mortgage and a Lifetime Mortgage.
One important thing to consider while going for this plan is that you should know if your plan gives you negative equity guarantee. It means that if the property value decreases, your debt should also decrease. At the time of applying for an equity release plan, it is important to take note of the hidden charges as those involved in your house equity estimation. The cash amount approved depends on your age as well.
Generally, as per the agreement of this scheme, the amount a home-owner receives from the lender is repaid only after the death of the borrower, by way of his property value. The biggest advantage of is the financial security that a homeowner gets for the rest of his/her life. And also if the loan interest rate falls, the homeowner may ask for a lower interest rate as applicable on the borrowed amount.
Before you decide on this scheme, it is advisable to understand its terms and conditions before you can decide if this scheme is feasible to you.
