Your bathroom pipes have been leaking lately, and your shower head seems to be clogged up. Since you just retired, this is the time to handle such issues and work on more home improvement projects. However, you have limited financial resources and need to come up with the capital to work on these projects. Luckily, your friend suggests trying the equity release loan, and after a brief explanation, you realize that this mortgage plan might be the answer to your prayers.
What’s Equity Release?
Equity release1 is a financial plan that allows homeowners aged 55+, with estates worth more than €70,000, and those within the remits of the UK, to unlock the value of their property for financial profit. The scheme also provides them with tax-free cash and offers them the rare chance of residing in their home until they die or move out permanently.
The plan has two options, lifetime mortgages and home reversion schemes. The lifetime mortgage allows you to untie the equity locked in your home and enables you to continue living on the residence until you pass away or move into long-term care. You repay the loan when you die, plus all the interests accrued overtime. It also has various options like the interest-only mortgage, voluntary repayment option, income mortgage, among others, so you have the option of variety.
Home reversion plans, on the other hand, offer you financial freedom, but you sell a part or all of your home. When you die or move out into permanent care, with this plan, unlike the lifetime mortgage, your lender sells your home, takes the sale proceeds from his/her share of the sale, and offers your family the remaining profits. It also doesn’t have any interests accrued, unlike the lifetime mortgage plan.
The equity release plan, like any other financial product, has its cons since it reduces inheritance, affects your entitlement to means-tested benefits, and subjects you to early repayment charges and hefty fees. However, its benefits overpower the cons. It offers you tax-free cash, financial freedom to do whatsoever you want with the money, allows you to remain in your home, provides you with the negative guarantee, and enables you to move houses. The plan is also regulated by the Financial Conduct Authority2 (FCA) and governed by the Equity Release Council (ERC)3, making it a safe option.
Getting the cash is simple since you only have to go through a simple process of evaluation. After the process is complete, the funds are placed in your account, and you’re free to use it as you please. So if you want to call your favourite interior decorating company or bathroom experts, you can go ahead and have them come to your house, work on the projects that need to be done, and renovate your residence into your dream house.
If you also want to fund your trip to Barbados, Peru, or Brazil, you can get your passport and visa ready and sip some Mojitos along the beach. If you want to pay your debts or mortgage, finance your long term care, help out your family or buy that second home, equity release allows you to actualize all these needs and dreams.
It’s one of the most incredible financial plans to consider when you retire. So, stop overthinking and stressing about where to get cash for that home project or vacation plan. Equity release was specially designed for you, so get that money. It’s yours for the taking!