Tag Archives: Equity

Is It Hard Releasing Equity From Your Home?

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It is not at all hard to release equity from your home under the given market conditions. Releasing equity from your home can be a straight forward event under the right advice from brokers or independent financial advisers. It is important that you seek advice only from the qualified and approved independent financial advisers. They can help and guide you in understanding all the key features as well as the associated risks related to the different equity release schemes regulated by the Equity Release Council.

The eligibility for taking an equity release on your home in not difficult. You must be at least 60 year old for opting a home reversion plan, however the minimum age for lifetime mortgages is defined as 55 years by most of the equity release providers. You must also own a home in UK, which is in reasonable state and free from any outstanding mortgage.

If the house is under some shared arrangement with your spouse or partner then the equity release can be taken jointly by the consent of both the partners. Moreover, in joint occupancy cases, the age of the youngest homeowner must be at least 55 years. The process starts by fixing an appointment with a financial independent adviser or broker. Financial adviser will recommend you some equity release schemes depending on your individual requirement and financial state.

The application process for releasing equity from your home starts by filling an application form with the help of your financial adviser. He will also help you to submit the form to an equity release provider along with the required fees. The equity release provider will appoint a RICS qualified surveyor to visit your home and do the valuation of your property after your application form is received.

An offer will be made to you stating the amount that can be borrowed and your solicitor will help you understand all the legal terms and conditions attached to it. You as well as your solicitor will be required to sign the acceptance form and send it back to the equity release provider. After completing all the legal checks and formalities, the equity release provider will release the funds to your solicitor who will assist you to get the money transferred in your account.

How does a Lifetime Mortgage Scheme and a Home Reversion differ?

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As people live for longer, planning carefully for retirement becomes more and more important. Living costs are on the rise, and there are a growing number of people who own valuable property but are strapped for cash during old age. This is why equity release schemes have become a popular concept. Because it allows people to free up the equity tied up in their homes, without the need to sell the property or move.

Equity release schemes have come a long way since they were first introduced to the market. Rising demand for equity release solutions resulted in increased competition among providers, and today, the equity release market is much more favourable for customers. Equity release plans available today are much more flexible, and interest rates are also generally lower than a few years back.

The two main types of equity release are lifetime mortgage deals and home reversion schemes. Both types of equity release allow customers to free up some of the equity built up in their home and use it as cash. The amount can be taken as a lump sum or in the form of monthly installments. Most equity release schemes need to be repaid only when the owner has died or moved into care, which is when the property can be sold.

A lifetime mortgage is a loan that is taken out on the property. In this case, the applicant retains full ownership of the house. The loan along with the accumulated interest is repaid once the property is sold. Interest that is incurred on the amount is added to the principle amount, so that effectively, interest is charged on the previous interest. This is known as compound interest. One of the most common concerns with compound interest is that the debt can quickly grow very large.

There are some new lifetime mortgages known as interest only mortgages, which do not incur any compound interest. Instead, interest is paid monthly, and in the end the amount to be repaid remains exactly the same as the original amount that was borrowed. Interest only lifetime mortgages may have higher interest rates in order to be financially viable for the lender.

Home reversion plans involve selling a certain portion of the property to the lender. The ownership is transferred into the lender’s name, and the customer retains some portion of the ownership. When the house is sold, the lender retains the same proportion of the sale value. Both home reversion and lifetime mortgage equity release schemes have their own pros and cons. If you’re considering equity release as an option, consult a financial advisor for objective and professional guidance.