People reaching their retirement are often worried about the rising costs of living. After retirement, income reduces but expenses do not. People save their hard-earned money with the hope of spending the rest of their lives comfortably. Rising inflation has made this a struggle for many.
How do equity release schemes help?
Equity release schemes help all those retired individuals who are looking for some options to make money. If you are over 55 years of age then you are eligible to apply for an equity release scheme. With this scheme, you can release the equity stored in your home and still be the owner of the house. The lender, like a conventional mortgage will simply place a charge on the property to say that once it is sold, the lender will be repaid first.
For those who are still unclear about what an equity release scheme is, the below information can clear some of your doubts. Equity release schemes broadly fall into two categories – lifetime mortgages and home reversion plans.
Lifetime mortgages are one of the most common equity release schemes. Depending on the value of your property and your age, you will get a lump sum from an equity release provider. The agreed amount can be paid as a whole amount, a partial amount with a monthly income or as a minimum amount at the outset with a drawdown facility.
All lifetime mortgages have interest accumulated over the capital. The rate of interest is fixed. This amount builds until the pending amount is repaid, which happens either when the house is sold off or when the last surviving owner passes away.