Life after retirement can be challenging, especially if you don’t have enough capital to supplement your pension or to maintain your lifestyle – that’s where equity release schemes come in.
However, with the number of lenders and sites flooding the market, it can be challenging trying to wrap your mind around these plans. Moreover, with the limited research options and expenses that come with consulting professional advice, you can opt to take out other schemes and leave out equity release.
Well, lucky for you, by checking out this EveryInvestor guide, you’ll get unbiased information about equity release schemes and how they can be your answer to all your financial issues.
Change the Narrative to Your Retirement by Taking out an Equity Release Plan
Most people have a plan of how they want to live when they get to their fifties. It might involve staying at home and playing with your grandchildren or going on cruises and hosting barbeque parties at your home.
As you get older by the day, and near your retirement, however, you need to know where you will get money once you stop getting a paycheck. To get this extra money, you might dig into your savings, sell off assets, or get a loan.
However, there’s another option most people forget, and this is equity release. It allows you to release equity tied up in your home or property. It means that a lender can give you up to 60% the value of your home, whether in a lump sum payment or installments. Your lender will offer you the money with a specified interest rate, but you can still leave in your home.
There are two products under the equity release plan, and while their fundamental workings are pretty similar, there is still a difference between opting for a home reversion plan as opposed to a lifetime mortgage. The home reversion plan allows you to sell part or all of your property to the lender and get between 20 to 60 % the value of your property. With a lifetime mortgage, on the other hand, you take out a mortgage on your property or part of it.
Three Reasons Why Equity Release is A Good Idea
Here are three reasons why it might be just what you have been looking for:
#01. You Are Guaranteed Cash You Don’t Have to Worry About Paying Back
When you walk into the bank and ask for a loan, whether, for personal or business use, you will need to come up with a payment plan. Equity release products, however, aren’t like regular mortgages. You can get the money depending on the value of your property and the arrangement you have with your lender and not worry about how you will pay it back. It is because on your death, or when you decide to move into a care facility; your property will be sold to settle this loan and the interest it has accrued.
#02. You Don’t Have to Alter Your Lifestyle
If you don’t have a constant source of income, you can downsize, use your savings, or sell off what you have to continue living comfortably. While getting a smaller house may not be a bad idea once you retire, few people are okay with having to give up on the luxuries they were used to.
With equity release, you can get either a lump-sum payment or installments. You can then do some financial planning and use this money to increase the value of your current assets, invest, or even take yourself on a cruise.
#03. You Can Still Move House
When you opt for either of the equity release products, you get money based on the value of your home, but it does not mean you have to move out immediately. However, if you wanted to move houses, this is still possible. You will, however, need to have a sit down with your lender to assess the value of the property you are moving to.
Going for equity release will allow you to make the assets you have been working hard to accumulate, work for you. However, it would be best if you were fully informed about what you will be walking into!