If you are retired then you will be aware about the implications involved within the pensions industry. Confusion surrounds the current funding of company pension schemes & the size of the shortfalls that exist within them. The knock effect of this has been the lack of saving towards one’s retirement.
This is becoming more evident with today’s retired population having minimal savings for their retirement years. The financial implications of this are that people are struggling financially in retirement meeting everyday expenses & those ‘one off’ costs that unexpectedly arise.
Many retired people face various financial challenges when their earnings cease. If you cannot manage with a minimum pension and limited savings then equity release could be an ideal option for you.
Insurance companies & annuity providers today make up the current crop of equity release companies that provide equity release schemes to old aged homeowners. Home reversion plans and lifetime mortgages are the two popular equity release schemes offered by them. If you have decided to go for equity release then you must understand the procedure.
How equity release works
Although there are many equity release schemes in the market, all of them are designed on the same basic principle. These schemes lend you a lump sum amount of money against the value of your property. The equity release providers will eventually receive their money by selling the property after you die or move into care.
To qualify for equity release schemes, you have to be above 55 years and own a home which is worth a minimum of £70,000. The property should be of standard construction & any mortgage that is secured on it must be repaid with the equity release or alternative funds. You cannot have both an equity release scheme & mortgage running concurrently.
Therefore, people with little or no mortgage can potentially apply for a lump sum via equity release schemes. An equity release plan involves the lender placing a legal charge on your most expensive asset, so it is recommended to seek the services of an experienced & qualified financial advisor.
By opting for equity release schemes, you can receive a lump sum amount or regular income. This income will help you to live your retired life in a much better way. The money which you will get through equity release schemes is tax free, so you can spend this money in various ways.
If you are planning to go with equity release schemes then research properly, as it involves a big amount of money.
To seek the services & advice from an industry qualified equity release adviser call us on 0800 678 5159 or to find your local adviser by clicking here.