Sue’s Guide To Eq­uity Re­lease

My Weekly - - Finance -

Un­lock­ing spare cash from your home can be a way to boost your in­come – or it could give you a lump sum for that “once in a life­time” hol­i­day, much needed home im­prove­ments or a new car.

Eq­uity Re­lease schemes of­fer the op­por­tu­nity to do just this and they’re in­creas­ingly pop­u­lar ac­cord­ing to fi­nan­cial ex­perts De­faqto. Changes to state pen­sion age, in­creased life ex­pectancy and lack of sav­ings adds pres­sure to make money last longer.

Ac­cord­ing to the Eq­uity Re­lease Coun­cil, the value of eq­uity re­lease lend­ing grew by 77% from 2015 to 2016.

Lots of com­pa­nies of­fer Eq­uity Re­lease schemes, in­clud­ing big names like Aviva, LV= and Le­gal & Gen­eral so what should you con­sider be­fore you sign on the dot­ted line?

There are ba­si­cally two types of eq­uity re­lease: home re­ver­sion and life­time mort­gages.

A life­time mort­gage means tak­ing out a mort­gage on your home. When you die or go into a care home, your home is then sold and the debt re­paid along with any in­ter­est out­stand­ing.

These are the most pop­u­lar form of eq­uity re­lease but these “mort­gages” are more ex­pen­sive than or­di­nary ones with av­er­age in­ter­est rates of 6%.

An­other op­tion is Home Re­ver­sion Plans. They’re less pop­u­lar, and mean sell­ing all or part of your home in ex­change for a cash lump sum or reg­u­lar pay­ments. Once again you can still live there, sub­ject to terms and con­di­tions.

There’s lots to think about, so for more in­for­ma­tion go to the Money Ad­vice Ser­vice web­site WWW.MONEYADVICESERVICE.ORG.UK and Eq­uity Re­lease Coun­cil WWW.EQUITYRELEASECOUNCIL.COM.

Which is right for you?

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