Have you heard of equity release? Well it is a means of providing a person or persons with either a lump sum or a regular source of income late on in life, typically after retirement. However it is not right for everyone, and hopefully this article will help the process
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Online PR News – 26-September-2012 –Have you heard of equity release? Well it is a means of providing a person or persons with either a lump sum or a regular source of income late on in life, typically after retirement. However it is not right for everyone, and hopefully this article will help the process of showing who it is or is not right for especially with all the money problems we as a country have had in the last couple of years.
It is rather like a mortgage in reverse, whereby equity is released from a property using the value of the house as surety, which is then repaid to the equity release company when the owner dies. This does mean that the value of any estate that is left behind will be devalued as a result. If your not sure what this means, its highly advisable to talk to either (or both) your bank manager and an Investment Advice in Kent so to know where each individual stands and what the best options are.
Equity release comes in several variants as follows: -
Lifetime mortgage – This is whereby a mortgage loan is secured on the home, interest is added on to this loan as with a normal mortgage, however the mortgage is repaid by the sale of the house upon the owners death. The home owner is also responsible for the upkeep of the property, but maintain the holder of the title deeds of the property.
Interest Only Equity Release – This is whereby a loan is made against the property but the owner only pays the interest on it, with the capital sum being repaid upon death.
Home Reversion – This is whereby the house is sold to a third party and the owner receives a lump sum or regular income, and are allowed to continue living in the house until you die.
Home Income Plan – This is when a mortgage is taken out and used to purchase an annuity plan to provide an income.
As always its recommended home owners speak to an independent adviser if considering entering into such schemes, for example, seeking mortgage advice in East Sussex is highly recommended before taking any further steps.
One disadvantage is that it can decrease the amount of money the will be left behind if the property does not gain value at the same rate as the interest accruing on it. Another is that it may affect any means tested benefits the property own gets, and lastly its important to remember that it is in general far more expensive to do than simply selling your property to release equity.
The advantage of an equity release scheme is that it can provide a regular income during retirement until you die. Those that take advantage of an equity release scheme are also protected from negative equity under negative equity guarantee schemes. The schemes also reduce the amount of inheritance tax that will have to be paid by the estate.
The main two types of equity release in the United Kingdom are lifetime mortgages and reversion plans. As ever before entering such a scheme always take good independent financial advice.
AF Management offer a wide range of financial advice services in Kent with user friendly information on Investment Advice in Kent, Mortgage Advice and much more along with Pension Advice in East Sussex.