Should you be considering equity release?

Before we go onto equity release schemes reviews, let’s first ask if you need an equity release scheme. If you're like many other people who are not getting enough money to support yourself in your retirement age then equity release schemes are definitely an option worth considering. For example we are seeing more and more people getting less from their pension than they used to in the previous years and this is leading to income shortfalls for many.

You may be familiar with the phrase property rich but cash poor. What this essentially means is that all of the homeowner's wealth is tied up in their property. So someone may have bought their house at a relatively small figure many years ago and that house may have increased significantly in value since its initial purchase but the cash in the house cannot be released until the property is sold. So for these people who are property rich but short on cash, an equity release scheme is definitely an option worth considering.

Many people these days are considering equity release schemes for many reasons including; paying off debt, paying for their children’s education, home improvement, paying for the day to day necessities, buying a new car, raising cash for an investment and so on. There are lots of reasons for people to consider equity release and in many cases it can make a lot of sense.

However, picking the right equity release scheme is not the simplest of tasks to take on, considering that selecting the wrong scheme can prove very costly in the long term. Taking the wrong decision cannot only affect you but it can also affect the rest of your family and any potential beneficiaries of your estate. So if you're looking to take out an equity release plan, it is imperative that you read the below equity release schemes reviews to make sure that you don't end up making the wrong decision. Being informed through equity release schemes reviews will help you make an educated decision about the way forward.

After reading the equity release schemes reviews below, if you would like further help then you can also contact us and we will help you interpret the financial jargon into a language that you can understand. That means we will work closely with you to review the various equity release schemes in relation to your personal and financial circumstances. Equity release schemes reviews is an important step to help both you and us understand how the different plans will fit your requirements so have a read of the equity release schemes reviews below to get familiar with the different plans.

The home reversion plan is where you sell a portion of your property to the equity release provider to release extra cash from your property. The sale means that a portion of your property is legally owned by the equity release provider. If you take out equity with a home reversion plan, there is a possibility that you may have to pay a nominal amount of rent.

Can you be evicted from your property?

Even when your property is sold you can remain living in your home until death or until you are taken into long-term care. The scheme provider has no legal rights to evict you from your property until you die or until you are taken into lifetime care.

How much do you get paid when you sell your property?

When you property is sold the amount you receive is governed by what percentage of your property was sold to the home reversion provider. So for example if you sold 50% of your property to the home reversion provider when the property sells, you will receive 50% of the sold price. So if we take an example of a property sale price of £100,000, if you sold 50% of this property to the equity release provider, you would receive £50,000 i.e. 50% to be passed on to your estate.

What will happen if the property value increases at the time of sale?

If the value of your property increases then the homeowner also benefits from the price rise. So for example if 50% of your property was sold to a home reversion provider, when it comes to the sale of your property, any price rise on the 50% portion of the property will be passed on to your estate. Conversely if the property happens to have reduced in value then you will suffer the depreciation in your 50% portion of your share. It must be noted that the risk of the price reducing will always be there irrespective of whether you have an equity release plan in place or not.
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A lifetime mortgage is different from a home reversion plan in that, with a lifetime mortgage, you don't sell any of your property but you take out a loan on your property to use as cash. The lifetime mortgage is different from the “standard” mortgage in that you don't regularly pay the interest on the loan. What actually happens is that the interest is “rolled over” and it is accumulated to be repaid (together with the loan value) when the property is sold. Once you take out a lifetime mortgage you can continue living in the same property without having to relocate into a new home.

How do you receive the money on a lifetime mortgage?

There is no hard and fast set rule as to how you receive the money on a lifetime mortgage. The money that you release can either be paid as a lump sum cash amount, or you can receive it as a regular income, or you can even get paid with a mixture of the two methods. The method that you choose to be paid depends entirely on you and your circumstances. For example, monthly income is useful for when you're experiencing regular income shortfalls and you can use the money from your equity release scheme to “top up” your income. On the other hand you might prefer to get paid cash lump sum to clear debts or to fund either investments or even things like home improvements and so on. You may even fancy a mixture of the two where for example you might opt to get paid a portion of your equity release fund as a lump sum to start with and then receive the rest of the money as and when required. So for example you might need to release money for various occasions such as Christmas or you might need the money to take a holiday.

How does the interest rate work on a lifetime mortgage?

The main thing to remember about the interest rate on a lifetime mortgage is that although you don't pay interest on a regular basis, the interest is rolling over and accumulating over the duration of the mortgage. The other thing to remember is that when you're not paying interest you are charged interest on the interest.

When do you repay the lifetime mortgage loan?

Your loan plus interest is repaid with the proceeds of the sale when your house is sold. This essentially happens when you die or when you are taken into long term care.

In addition to the two commonly available plans we may also review additional plans in case the more popular schemes fail to fit your needs. Our objective is to use the equity release schemes reviews to make sure you are satisfied with the plan that you choose. Reviewing the different equity release schemes with us will mean that we will suggest the various options available on the market today. As part of the equity release schemes reviews we will also consider the two main types of equity release schemes; the home reversion plans as well as the lifetime mortgage to see which plan will be more suitable for your long-term financial goals.

So if you are seriously considering releasing equity from your property for extra Tax-free cash then contact us so that we can help you pick the right plan. Our experienced advisers will talk you through each step of the way to make sure you understand the various elements of equity release schemes.