Many retired people are torn between two conflicting thoughts about equity release. Owing to lack of clear idea, they hesitate to move further to convert the equity value of their residential properties into cash money. Answers to the following frequently asked questions on house equity release will give a clear picture - 

What is home equity?

Equity refers to the monetary value of your house. The equity value of a residential property accumulates over the years minus any kind of loan you have borrowed against it. If you have not mortgaged your house as a collateral to secure a loan, you will get the total equity value.

What does equity release refer to? 

Equity release allows a house owner to retrieve money from the accumulated equity value of the house. It provides a lump sum in cash to the house owner in times of financial need after retirement. It is a source of regular income for the retirees. 

How old does one need to be for equity release? 

You can get the benefits of equity release via two plans – lifetime mortgage and home reversion. You and your spouse need to be over 55 years for a lifetime mortgage plan. You must be 65 to be eligible for a home reversion plan. 

How can one use the money from home equity? 

You have absolute freedom to use the money from your home's equity as you wish. There is no restriction to curb your liberty in this case. You can utilize the money to bear your monthly expenditure, to purchase a car or an asset, to repay a loan, to invest in business or afford a lavish lifestyle. 

Does one need to be in good health condition? 

Good health condition is not among the eligibility criteria for an equity release plan. It is not a concern with the equity scheme providers. However, you had better consult with a provider when you move towards availing a plan from him. 

Follow the next blog answering more questions on house equity release...