What Is Equity Release and What Can It Do For You?
Kent really has it all, doesn’t it? There’s a special quality about this county that means there’s always something on offer for every generation, from the kids running riot on school holidays to those of us maturing nicely in The Garden of England. No matter our age though we sometimes need a little advice on how best to deal with the challenges that life throws our way and if you’re looking to release equity then you’ll need to know what’s what….
Getting the Picture and Seeking Advice
When you’re entering into any kind of financial arrangement, whether that’s setting up equity release or just opening a new account, it goes without saying that it’s not something to be taken lightly. At the same time though, it’s really nothing to be afraid of. The number of advertisements and warnings you get these days about avoiding scammers, checking to see if you’ve ever been mis-sold PPI, finding the right building society for you and so on and so forth is sometimes quite overwhelming. There are ways to cut through all the jargon and the confusion though. You can check out good, clear and simple guides on the subject to give you a better understanding of the facts. You can also seek advice from a professional. There’s so much insight that a financial adviser can provide, and of course the sense of reassurance that comes from talking to someone who really knows their onions is immense!
Of the two kinds of equity release commonly available, the lifetime mortgage is perhaps the simplest. What happens is that a certain proportion of the value of your property is made available to borrow, and that can range from something like 18% all the way up to half the total value of your property. It gets repaid when the home is actually sold, which usually is when you move into long-term care or pass away.
There are various options available on top of that such as ring-fencing some of the value of the property so that your family can still have some inheritance. Then there are options concerning the interest that builds up over time (obviously a bank or building society have to make their money somewhere along the way!) The interest can be paid as you go along to keep things manageable and there are certain guarantees on offer too such as a “no negative-equity guarantee”, the idea of which is essentially that the interest won’t end up being more than can be got out of the sale of the property when it eventually comes to it.
Home Reversion Schemes
These are the second option and are similar to the first but work a little differently. What you’re really doing with these schemes is selling your home, or a part of it, but continuing to live in it just as you were before. Nothing changes concerning the day-to-day side of life as you have a very definite legal right to live in the property until you move into care or pass away. All that it means is that technically you’re not the owner but instead a home reversion provider is.
Whether you’re looking to supplement a pension or help provide children or grandchildren with a deposit for a property of their own, equity release can be a good option and seeking a little advice is the best way to start.