Confused about equity release?Posted on: 16 July 2012 by Gareth Hargreaves
The issues surrounding pensions in the UK affects us all, but it's already a very real and daily challenge for millions of retired people in the UK
The issues surrounding pensions in the UK affects us all, but it's already a very real and daily challenge for millions of retired people in the UK.
Equity release plans – also called lifetime mortgages, home reversion or home income plans – are a way of releasing cash, whether to buy that new car, to pay for a holiday or home improvements, or simply to make daily life more comfortable. Equity Release enables you to borrow money against the value of your home, with the debt being repaid from the sale proceeds after your death.
Because the equity is already yours, there is no tax to pay on the funds you receive, and there are no regular repayments to make. With a lifetime mortgage, which is the most popular form of equity release, you continue to own 100% of your home throughout.
If you are a homeowner, aged 55 or over, you could be eligible to take advantage of soaring house values by releasing equity from your property. This can significantly improve your standard of living - enabling you to benefit from the comfortable retirement that you deserve.
How Can Equity Release Help Me?
Because the money that is obtained is yours in the first place - you're simply 'releasing' it - there is no tax to pay and the funds are yours to spend on absolutely anything you choose. Whether you wish to treat yourself to the holiday of a lifetime, help your kids onto the property ladder or simply improve your standard of living by clearing your mortgage or paying off personal loans, there are no restrictions.
In simple terms, the additional disposable funds that you can obtain through equity release allow you to enjoy a more comfortable retirement. Furthermore, you can have the opportunity to live out many of the dreams that you longed to fulfil whilst you were working or raising your family.
Top Reasons For Equity Release
- Home improvements
- Clearing your mortgage
- Improving your lifestyle
- Financial security and peace of mind
- Avoiding inheritance tax
- Paying off debt
What Types Of Equity Release Are Available?
There are three main categories of equity release, and within each of these are numerous different plans. More details on these plans can be found by following the links below.
- Lifetime Mortgage
Allows you to release a lump sum from the value of your property, with the amount released plus any interest accrued repaid out of your estate when you pass away or move into long-term care.
- Drawdown Lifetime Mortgage
Similar to a lifetime mortgage, but with added flexibility, as the cash can be released over time, as and when required, which can reduce the amount of interest accrued.
- Home Reversion Plan
You surrender some or all of the ownership of your property in exchange for a lump sum of money and the right to remain living in the house, rent free, for as long as you live.
Of course, in order to get the most benefit from equity release, it is extremely important that you choose the right plan to suit your individual needs and circumstances, which is why advice from specialists such as Age Partnership can make a big difference.
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