According to research done by the University of Leeds, there’s a staggering 9.5 million of equity currently being unlocked every day and 1.7 billion throughout the first 6 months of 2019; going to show that the demand for equity release is growing as most persons as starting to view it as one of the most reliable and flexible financial planning for later life.
That’s understandable, especially when you consider that the real estate market is one of the most profitable industry and with the population growing, the property prices roughly double every three years.
That said, you can also be part of this percentage and make your retirement unforgettable by taking out an equity release plan. If you have no idea what it’s about, its benefits, and the types of schemes offered, here’s a comprehensive guide by John Harris, Equity Release Specialist at LondonInvestorShow to help you explore this market and have an in-depth look on how does equity release work.
What is Equity Release?
Equity release enables those who are over 55, property rich but cash strapped, to unlock the value in their estates by turning it into a cash lump sum or steady income.
With this plan, there are typically no monthly repayments to make, and you continue to own and reside in your estate until you breathe your last or move into permanent care. Only then do you get to repay your plan from the sale proceeds of your home.
Types of Equity Release
There are two basic ways for you to unlock the equity tied up in your estate without having to move. They are:
1. Lifetime Mortgages
It’s an equity release plan that mainly involves you taking out a loan for an agreed amount of tax-free money secured against your property. It’s available to homeowners aged 55 and over.
You get to reside in your estate, and you don’t have to make any monthly repayments. Instead, the capital you borrow, and any accruing interests are paid back when you pass on or move into residential care. If there is any cash left over once the mortgage has been repaid, this will go to your estate or your successors.
2. The Home Reversion Scheme
A home reversion plan, on the other hand, lets you sell part or all of your residence in return for a tax-free lump sum or a monthly income. It’s available to homeowners aged 60 and over.
The amount your plan provider pays is below the market value since you also get the freedom to reside in your estate – this means that you can live there rent-free until you breathe your last breath or move out permanently.
The Perks That Come with Releasing the Equity from Your Home
1. Financial Freedom
Whether you plan on using your cash on that holiday at Malibu or Borabora, making some home gentrifications, or boosting your pension pot, equity release provides you with a convenient and straightforward way of catering to your life’s most meaningful events.
2. You Get Flexibility
One of the main reasons why most people today are opting to take out equity release is because they’re the most flexible financial options you’ll ever take.
Indeed, if you’re to take out a lifetime mortgage, your plan provider won’t require you to offer him a business or financial plan on how you wish to spend your cash. You’re free to spend your tax-free money it as you want.
3. You Have the ‘No Negative Equity Guarantee’
The law advises that before you take out a plan, you ensure that your plan provider is a member of the Equity Release Council. It’s the industry’s governing body, and each member has to heed to its standards and codes. One of these is the ‘no negative guarantee’ – which means that house price changes can’t drive the amount you payback.
Your retirement is supposed to be the most memorable time of your life. You have all the time to travel and enjoy the sceneries that God generously offered us. So, if you’re having any financial troubles, you live in the UK, and you own property, what are you waiting for?
Go and get yourself the lucrative equity release plans. You won’t regret it!