Are you property-rich, but cash strapped and looking to get some extra finances to cater for the gentrification of your home or help you check out those boxes on your ‘bucket list’?
Well as per statistics conducted by some experts, the most stress-free solution is to take out an equity release plan.
In fact, according to SovereignBoss, since the beginning of 2019, the market hit a new record with retirees withdrawing over 3 billion of property wealth in 2018 via some 30,000 plans. The demand for equity release plans on residential estates is booming, and with the hasty and continuous increase in property values, this trend is predicted to continue.
It seems very simple, right? Well, as it is with lots of things in life, it isn’t as straightforward as it looks.
There are more than thousands of articles on equity release, and some can be very conflicting thus making this hugely significant financial resolution even more complex and convoluted – at a time when it is essential, you make the perfect choice for your situation.
.Bearing that in mind, here is an unbiased guide by John Lawson, an Equity Release Expert, that will help you explore the world of equity release and get to know the perks of taking out a plan.
What Is Equity Release?
Equity release, in a nutshell, is a way to access some of the capital tied up in the value of your residence without having to move house.
Various schemes enable you to release this capital, either through taking out a loan secured against your estate or selling a part or all of your residence.
With either plan, you get to reside in your home until you breathe your last breath or move into permanent care.
Depending on the scheme you choose, you can release the cash either as a lump sum or in installments, and you have the freedom to use the equity you release however you please.
The Benefits of Equity Release
There are several advantages to taking out equity release, and some of these include:
- You get tax-free money to spend as you wish – you don’t have to pay income tax or capital gains tax on the cash you release from your estate
- You have the freedom to reside in your home – you don’t have to downsize or go through the hassles that come with relocating to a new house
- Depending on the equity release company you choose, you don’t have to make any monthly repayments unless you want to – as per the contract that comes with the plan, you make all the payments when you pass on or move into permanent care
- You’ll never owe more than the initial value of your estate – thanks to the ‘no negative equity guarantee.’ It also makes sure that no debt can be transferred to your next of kin after the plan provider puts up your estate for sale
Equity Release Tips
Equity release is a daunting financial product, and thus, there are some things you need to keep in mind about it:
- Make sure that you don’t borrow the full amount in one go – the sooner you take out the mortgage, the most costly it’ll be in the long run, since the interest will accrue.
- As per the FCA’s regulations, before taking out a plan, make sure that your plan provider is a registered member of the Equity Release Council (ERC). The trade body’s members must ensure that they offer you the ‘no negative equity’ guarantee, so your residence will never owe more than your home is worth
- Before taking out a mortgage plan, make sure that you seek professional So contact your local financial adviser with an equity release qualification to find the best deal.
Equity release is a financial commitment correlated to your property, so it can be one of the most vital decisions you’ll ever make. It also comes with lots of features, and thus there’s a lot for you to consider. Therefore, you need to ensure that you get financial advice from an unbiased professional. Remember, this is the stepping stone to a great retirement!