There are many tempting investments in the market today. Some are very promising that the return of investment is actually quick, in just a year or so. Many elderly citizens are being lured that they even plan to take an equity release for a promising investment. The question though is that it is advisable for elderly citizens to get an equity release considering that their property is at stake. Use a free equity release calculator to know what are the accrued interest rates on this type of financing scheme and read on equity release faqs to gauge if you are making the right decision after all.
Equity Release FAQs
What is an equity release?
Equity release is a way to maintain the use of a house or other capital-valued object while using the value of the house to obtain a total price or a stable source of income. The downside is after the homeowner has died, the income provider will get ownership of the property leaving out the beneficiaries with nothing (in terms of property secured for equity release).
Am I still going to own my home when if I get an equity release?
Yes, if you get a lifetime mortgage, you will own home – even if the loan is a large part of the total value, you will still own it, except that you may not be able to transfer too much once interest is generated.
Could you sell your property but still reside in it?
In the event that you were to choose a home reversion plan, then absolutely yes, it can be possible to offer your home and carry on and stay in it within a lease contract set up.
Is equity release transferrable?
If you wish to move residence and switch your equity release debts to the brand-new house, all of the service providers will be able to support this. Indeed, equity release programs that adhere to the Equity Release Council’s requirements enable you to switch to an “ideal alternative home”, however some houses will not be qualified – just like those in retirement living complexes – of course, if you are reverting to a small property or home, you might have to settle a part of whatever you borrowed.
Will I be able to pay equity release even before death?
Absolutely yes, although typically only once the house is sold and you just move to long-term home care. In cases like this, the home will likely be marketed and the mortgage paid back, in addition to any accumulated interest. The same will be followed if you decided to stay with family members for a similar purpose, however in several other instances, the ‘lifetime’ characteristics of the home loan results in paying big early repayment fees if you wish to pay it back earlier.
Equity release rates, how does it work?
Regardless of what choice you choose, you often won’t make virtually any standard monthly payments throughout the terms of the loan. Rather, the interest rate is incurred which adds to the sum you borrowed, much in a similar manner as with a regular mortgage although without the monthly payments. Interest is added up in your lifetime and it is commonly paid back by the end of the loan unless of course, you choose other agreements with your loan provider. The home loan is paid back at the time you pass away, or at the time you sell the property to move into long term residential health care; the sale profits will be used to settle the lending company, in addition to any interest anticipated.
Equity release is the very last thing you will want to do if you want to secure funds for another investment. Nonetheless, it is always best to talk to a professional financial adviser to help you decide on the best way to go in terms of investing or acquiring additional funds during your retirement.