arrow with text

Releasing equity to buy another property
content image

Releasing Equity to Buy another Property

Your home is a great investment that you build over your lifetime. If a sudden monetary requirement arises like funds to buy a new property, you can use your existing property to raise money. Does this mean that you have to sell your home or remortgage it in return for paying monthly installments for years? Well actually no, you do not have to if you know how releasing equity to buy another property is possible

Equity release is the process by which you raise capital against your existing property. It is a system that is become more common in the UK. There are several benefits of releasing equity to buy another property. For example, you do not have to make regular repayments and you can repay the loan when you sell the property. However, you need to be aware of the various factors, terms and conditions that go with equity release schemes.

Lifetime mortgage and drawdown lifetime mortgage

One way in which you can release your equity is by choosing the option of lifetime mortgages. With this method of releasing equity, you will have to mortgage your property for life with the lender. So, you get the chance to release equity to buy another property and you do not have to make any repayments.

Your property, on the other hand, is mortgaged until you are alive and when you pass away, it is sold and the lenders gets their money from the proceeds of the sale. You can stay in your house as long as you want with no fixed period.

The second method is called a drawdown lifetime mortgages. In this kind of equity release, you have the option not to draw money all at once. You can borrow money in a staggered manner depending on your requirement. Other features are similar to lifetime mortgage equity release scheme.

Home reversion plan

The third kind of equity release option is Home Reversion Plan. Under this plan, you can sell just one part of your property in exchange for money. You get a lump some cash which you can use for other purposes. When you pass away, you will retain a portion of the property minus the percentage of the property value that you have mortgaged. In this type of equity release, you do not have to make monthly repayments. The biggest advantage of this kind of equity release plan is that you have property left to pass it on as inheritance to your heirs.

Ensure that your rights and interests are protected

Although equity release are extremely viable for certain situations, they are risky if you do not secure your interests. In order to protect yourself against loss of property, you need to make sure that the property is insured in accordance to SHIP. This stands for Safe Home Income Plans and guarantees three things. Firstly, your debt never goes above the equity value. Secondly, you will retain the house as long as you want to. Thirdly, you can shift into another property or retirement home as per your wishes but the property will remain yours as long as you are alive.





Copyright © 2012 Equity Release Schemes. All rights reserved

Pages services 1 services 2 Equity Release Questions