Are you wondering how would you cope up with your financial requirements after retirement? Do you want to live a comfortable and luxurious life in your old age? Are you looking for ways to get a steady flow of income after your retirement? If your answers these questions are yes, you can consider opting for an equity release scheme.
Equity release schemes are the perfect solution for homeowners who want to unlock the equity they have built up in their property.
Most people do not know what equity release is and how can it help them. Seeking professional advice can provide a clear understanding about different types of equity release schemes.
Equity release schemes – what are the available options?
Equity release on property is of two different types – a home reversion plan and a lifetime mortgage. Homeowners can opt for either of the above options. However, the suitability of equity release schemes varies with the needs of the retirees.
In the home reversion plan, you need to sell your home partly or completely to an equity release company. In return, you will receive either a lump sum or monthly income from the equity release company. The amount you receive from the equity release company will depend on the current value of your property & your age.
Home reversion equity release schemes are available for senior citizens of 65 years or more. After opting for equity release, borrowers can continue to stay in their home, which is one of the biggest advantages of the scheme. After the borrower passes away, the home reversion company will sell the property and recover the loan amount.
The lifetime mortgage encompasses the roll-up schemes whereby the mortgagor retains 100% ownership of the property. No monthly payments are required.
Interest is charged & added to the balance on an annual or monthly basis depending on the equity release provider. Therefore the balance will increase over the period of the loan, which in turn can reduce the inheritance of one’s beneficiaries. However, all SHIP plans have the no negative equity guarantee included which ensures that no debt can be passed onto the beneficiaries.