Equity release

Equity release: an excellent option for many

Equity release is using the value of your home as capital in order to secure a one-off payment or for regular payments.

If you have paid off the bulk of your mortgage, or are sitting with a large amount of equity in your property, you might be looking for ways to release some of this cash. Designed for homeowners over the age of 55, equity release schemes give you a lump sum of money right away to spend in whichever way you choose. Although this cash advance is structured like a mortgage, there are no monthly repayments to make. Instead, you are agreeing that when the house is eventually sold, the capital which has been released to you, plus any interest, will be repaid.

There are lots of companies offering this sort of product, and it is very important that anyone considering equity release takes independent advice to make sure that the products you are looking at are suitable for your needs both now, and in the future. Rather than taking all of the money in one lump sum consider a 'draw down' plan which agrees how much you can borrow, and then allows you to take this in several smaller instalments meaning you only pay interest when the draw down is made.

Equity release is a great option for many older homeowners, but bear in mind that this sort of scheme which allows you to access the cash will decrease the overall value of your estate. A lump sum payment could also affect whether or not you are entitled to certain state benefits. Whatever sort of equity release scheme you are looking at, make sure the provider is a member of the Equity Release Council (ERC) which helps ensure that companies safeguard customers’ financial interests.

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