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Equity Release Schemes – Live Your Life The Way You Want

By Mark Gregory on the 29th July 2010

Gone are the days when you needed to sell your property to unlock the equity in it.

Equity release schemes now give you an opportunity to stay in your home while you can still financially benefit from it. You can utilise the value of your home as a means to receive cash. This can be in one lump sum payment, lump sum & drawdown payments or in the form of regular monthly installments.

This new income source can be used in many different ways and is becoming quite popular among people of retirement age. The increasing costs of everyday living expenses puts financial pressure on particularly the retired population.

A lack of finance in retirement can to prevent us from living comfortably on a daily basis. This is when equity release schemes can fulfil their potential in offering homeowners the perfect option to enhance their lifestyles & enjoy life.

You may want to carry out home improvements, lighten some of your financial burden or just spend some more time fulfilling leisure pursuits such as holiday breaks or even worldwide cruises. Equity release schemes enable you to live out all your dreams. The money you get from the equity release scheme can be spent in the way you want. Obviously, this is where independent equity release advice is important.

People often want to release the maximum possible from an equity release scheme & invest the proceeds. However this invariably is not the best option.

With the lowest equity release interest rates around 6.5%, by taking a large release from the property in the current econmic climate, it would be impossible (unless excessive risk was taken) that one could obtain the same 6.5% return.

Therefore, it is not good advice to take a large tax free lump sum from an equity release scheme just for investment purposes.

A more cost effective way of achieving this goal of increasing your income could be by a drawdown equity release scheme. This scheme would enable an overall cash facility to be provided by the lender. From this facility, an initial tax free lump sum can be withdrawn, leaving the unused facility with the equity release lender that can be drawdown over future years.

The advantage of this method is that interest is only charged on the money withdrawn; not on the remaining funds in reserve. Interest is only charged on this as & when additional funds are taken.

This reserve facility is therefore the solution to providing the income required. The funds can be withdrawn as ad hoc payments in minimum amounts of between £2000-£5000 depending on the equity release lender.

Therefore, depending on the annual income required, this amount can be withdrawn from the equity release drawdown facility meeting the income objective.

Considerations while opting for equity release scheme

While planning to opt for an equity release loan, there are few important things you need to consider. The lender, via the legal process will first check that all your mortgage & secured loan balances are completely repaid. They will also check whether you are the owner of the property by checking the land registry records.

Moreover, a valuation of your property will also be conducted by an independent local surveyor. Your age is also a determining factor on how much equity you can obtain.

If you want to live a stress free life after retirement, choosing an equity release scheme can be  an excellent solution.

Contact Mark on 0800 678 5159 to discuss your income options further or visit Equity Release Supermarket.

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Tags: Drawdown Equity Release Scheme, Lump Sum & Drawdown Payments, Drawdown Payments, Ad Hoc Payments, Equity Release Schemes, Tax Free Lump Sum, Lump Sum Payment, independent equity release advice

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