The advice to seek equity release is a good idea for the increasing numbers of people opting to let go of a portion of their home wealth.
Homeowners over the age of 55 have the option of equity release for various reasons, including trying to raise funds to cover their daily expenses or to fund a one-time cost such as giving an inheritance in the early years or buying an additional home.
If you’re thinking about whether it’s possible to remove equity from your home or if it’s the best decision for you, speaking to an expert equity release consultant is essential. They can provide you with everything from how it operates to the rates of interest available as well as the tax consequences.
Here are five reasons to seek the services of equity release advisers near me.
1. To comprehend the various options
Demand is rising, and the variety available equity release options available on the market has tripled in the last year. Equity release guidance can help you understand the various types of products available and to choose the one that best suits your requirements.
In general equity release products are classified into two categories that include permanent mortgages as well as home plans for reversion.
A life-time mortgage can be the most well-known product. This allows you to take equity in one lump amount, or choose a drawdown life-time mortgage which allows you to let a smaller amount at first and then create a reserve equity that is not subject to interest until it is accessed later.
Be aware that with drawdown products, the funds accessed via the reserves will be locked according to the current rate at the time and therefore could be different from that initial withdrawal.
In contrast an option for home reversion is when you sell a portion of your house.
Your equity release advisor will explain how different types of equity release mortgages could be suitable for your goals and how the interest rates will differ based on the kind of mortgage you select.
2. To minimise charges
The equity release guide will help you get the best mortgage for your needs, with an attractive interest rate and the best cost and charges.
For instance, you might want to repay a portion of the equity release plan later on. If this is the case your equity release advisor may be able to help you find the right product that has specific and predetermined early repayment costs in order to efficiently prepare for the future.
Other products permit you to make monthly or even ad periodic interest payments to keep your debt lower.
If you select an option to drawdown the only interest you pay is on the amount you taken out.
An equity release advisor will be able to suggest these and other methods to reduce costs based on what you want from the product and other needs.
3. To plan for unexpected costs
A compound interest payment on a life-time mortgage means that the debt will increase quickly. If you are living for a number of years after you take out a life-time mortgage and the market for property is slowed down, you may find that the amount owed eventually surpasses that of the worth of your home. This is referred to as negative equity.
To avoid being with negative equity it’s essential to sign an arrangement with a loan provider recognized through the Equity Release Council. These lenders provide a zero-negative-equity assurance, which means you will never have to pay more than what the value of your home.
A professional who advises on equity release can suggest products to safeguard your estate from further expenses. They can also provide an exact breakdown of the amount this plan is likely to cost you over your lifetime, so that you know the financial implications of the choice.
4. To protect your estate
If you opt to purchase an equity release plan it will leave you with less of it to leave to your family members in the form of an inheritance. Your home is usually transferred to the lender to repay the mortgage, which means you will have less to leave to your family members.
A specialist in equity release will provide guidance on how to maximize what you can get from your estate. For example, certain equity release options allow you to protect a portion of your equity in your home for a guaranteed inheritance.
It is important to discuss your ideas with your family members prior to making a decision to purchase the equity release option. Your family might want to assist you financially in order to protect their future inheritance.
5. To decide if equity release might be suitable for you, click here.
The advice on equity release can help you know your current needs and your goals for the future. This is because using a part of your wealth from property is likely to reduce what you can get from your estate over the future and can also affect the eligibility of you to benefits that are based on means.
An equity release advisor will take into consideration all the choices before recommending this type of product. It may be better to reduce the size of your home, take out a loan on your mortgage or receive assistance from your family members.