Equity release schemes are big business in the UK and they are an increasingly popular way for retirees to fund their retirement. But many people actually know very little about equity release products, and this post aims to help clear up some of those ambiguities.
Let’s start with the basics:
What is equity release?
Equity release is a form of loan, which is secured against the value of your home. Equity release providers usually offer different types of equity release, and it really depends on your individual circumstances, as to which I the best option.
Upon your death, the home is sold, and the funds from the sale of your home go towards paying back the loan.
What Can You Use the Extra Cash For?
The extra funds raised through equity release can be used for all manner of things. It’s your cash, so you can do anything you like with it. Finances are often tight when you reach retirement, and pensions don’t always cover the costs of those things that you always imagined you’d do with your retirement, such as a holiday of a lifetime, long-awaited home improvements, or the car that you always wanted.
How Much Does It Cost?
The cost of equity release varies from provider to provider. It depends on the size of your loan and a range of other factors, including your age, sex and the value of your home.
Is Equity Release Safe?
The Equity Release Council was recently formed, and aims to reduce the risks that people may face by entering into an equity release scheme. The council is working towards ensuring that consumers get a safe and fair deal.
Is Equity Release the Right Option for Me?
Equity release is by no means the right choice for everyone. It is a decision that should be thought about long and hard, and you should talk it through with your family and any other beneficiaries of your estate. There may be other solutions that are better suited to your situation, and you should really investigate every avenue before committing to anything.