Equity release schemes are becoming a great way to release the cash benefits from the value of your home. You can enjoy the benefits of having built such equity, while still maintaining ownership of your property.
You have two ways to benefit from equity release schemes. The first method is called a lifetime mortgage which involves taking a secured loan on your property and the second type of equity release is the home reversion scheme. This involves selling of a portion of your property to get valuable funds.
People who want to guarantee leaving a percentage of their property to their children or other beneficiaries will prefer the home reversion scheme. The reason for this is that having sold a percentage of the value of the house to the home reversion company, the homeowner will still retain the remaining fixed percentage in their name also. They are issued with a lifetime tenancy which means they have the right to remain at the property for the rest of their life, rent free. This percentage they own will continue until the house is eventually sold.
For example, if the homeowner sold 60% of the value of the property to the home reversion company, they themselves would retain the remaining 40%. Therefore, upon eventual sale of the property, the beneficiaries would sill receive 40% of the final sale value of the home, guaranteed. This way they can easily retain their most valuable assets. Other reasons for opting for the home reversion scheme is that if one has no beneficiaries & even no significant heirs to leave their inheritance to, may wish to sell 100% of the value of their property in order to take the maximum possible whilst they are still alive. This may seem excessive, but rather than leaving their estate to people who they feel should not benefit, they can enjoy the fruits of their working life & the resulting equity they have built.
Features of equity release schemes
Staying in your home
One of the biggest advantages of equity release schemes is that you can stay in your own home while enjoying financial benefits from it. Selling your old property and moving to a new, unfamiliar area can be emotionally as well as physically trying. One may not want to separate from friends and other family members who might be staying close to them. You may still need that additional room to entertain family & friends & when the grandchildren stay over in that extra bedroom you have currently, that may not be there if you downsize.
There are also the costs involved in moving such as solicitors fees, removal costs, stamp duty & the emotional price of up-rooting from somewhere that you have spent the majority of your life bringing up your children & other family issues. Equity Release can help you maintain your independence & the right to remain in the family home.
Live a life of luxury
People who take equity release schemes are able to fulfil their dreams & retire & relax. Some might go for holidays to foreign and exotic locations, while others may purchase a brand new car or carry out home improvements including redecoration of their home. This can be jobs that have been put of during their working lives for financial reasons, or even modifications to the property due to disability reasons. Also, upgrading the home with equity release including improvements such as new double glazing, loft & cavity wall insulation can assist on saving on your fuel bills. Therefore, some investment in the property can alleviate finances elsewhere thus paying dividends. For some people, it is simply pleasurable spending money on their family by way of gifting to the children now, rather than later and seeing them enjoy bringing up their grandchildren without the financial constraints that today’s society is imposing currently.
Almost all equity release schemes offer the benefit of having guarantees throughout your life. This can be the guaranteed interest rates for life on the lifetime mortgage scheme. There is also the no negative equity guarantee that the lifetime mortgage schemes also have, ensuring that any equity release scheme is adhering to Safe Home Income Plan (SHIP) regulations. This no negative equity guarantee ensures that the beneficiaries cannot ever incur any debt over & above the property value once the equity release scheme mortgage holders have died or moved into long term care.
Before going ahead with getting an equity release scheme, you should seek professional and impartial advice from the Equity Release Supermarket experts and read all documents carefully before signing.
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