Equity release; a term met with instant distaste and fear, however this out-dated approach could may well be having an impact on how people view their financial options during their retirement years with many having little knowledge and understanding of how it truly works and what rules have now been put in place to regulate the industry.
Equity release could be a way to alleviate the stresses for many retirees who are struggling on low pension plans and reduced state benefits, coupled with the rising costs of day to day living.
If you’re wondering about equity release and a little unsure of where to begin, then a good start is to start at the beginning…naturally!
Simply put, an equity release plan is a way of releasing cash tied up in your home to spend as you wish. The cash released can be drawn down in stages or taken as a cash lump sum. There are typically no monthly repayments to make and you are able to stay in your home until you and your partner pass away or move into long term care.
Before the equity release industry was regulated, many people who had taken out an equity release plan ended up leaving their loved ones with debt as the loan plus interest accrued on the loan exceeded the value of the property. Nowadays there are equity release plans available which are SHIP approved (Safe Home Income Plans) and ensure a ‘no-negative’ equity guarantee, allow you to stay in your home for life and enable you to move home if you wish (subject to provider criteria).
There are currently three types of equity release schemes available on the UK market. Lifetime mortgages, drawdown lifetime mortgages and home reversion plans. All these plans have their own benefits and drawbacks, which you can gain further information on through the UK’s leading independent adviser, Key Retirement Solutions.
However, most of us want to skip that stuff and get to the nitty gritty facts and figures, which you can obtain from an equity release calculator. An equity release calculator works on the basis of your age and property value and calculates the maximum you could release through an equity release plan. An equity release calculator is completely free to use and can be found across many websites, however it is highly advised that you contact an equity release specialist after receiving your results so that you can find out more about the types of plans available to you.
At Key Retirement Solutions, they search the whole of the market to find you the very best plan. Their first consultation with one of their local advisers is completely free of charge and you have no obligation to commit to anything should you decide not to go ahead with a plan.