Sue’s Guide To Equity Release
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.