If you are planning to go for equity release after your retirement to yet earn some income by sitting at home, you will be happy to read this article. This is because this article will give you an insight about this life-provision plan so that you can decide on how to go about it. So, here are top five key questions that you would like to explore in detail for releasing equity.
The very first question that anyone will ask is what equity release is. An equity release refers to fetching a specific cash amount against your current home value. Technically, it exists as a legal contract between you as a homeowner and the plan provider via which you are entitled to draw cash from the wealth locked up in your home. In short, you realize the benefit of your home value. Above all, the good news is that this income is free of tax.
The second question you will have in mind is how equity release can benefit you and your family. Although you might have got the idea after understanding what equity release is, it is still better to know it in deep. Well, such a way of earning money allows you (a retired homeowner) to meet all the homely expenses and fulfill the yet remaining dreams. You can pay your bills, go for a holiday, give pocket money to your grandchildren, or travel far to visit your friends.
However, you must be aware of the fact that equity release could alleviate your privilege to some state benefits, estate value upon your death, and your tax position. Therefore, it is better to catch hold of a financial advisor before you choose any plan or scheme.
The third question will be what types of equity release exist. There are two main types, Roll-up Lifetime Mortgage and Fixed Repayment Lifetime Mortgage. The former allows borrowing an agreed sum by mortgaging your home and paying the loan plus interest amount when the estate is sold. Here, a majority of plans offer fixed interest rates. On the other hand, the fixed repayment lifetime mortgage permits to decide on the agreed amount depending on your age, health, and value of home, which is then repaid to the provider y selling your property after the your death.
The fourth question to know is what are the qualifications or restrictions for availing an equity release plan. Well, it is true that not all are eligible for equity release due to some restrictions. First, the age of the homeowner must be between 55 and 95. Second, you must be the owner of the property and that its value must be £70,000 at least. Third, the property must be your permanent residence wherein you stay for half of the year at least. The fourth question to know is how the equity release process is executed. Well, for this, I would suggest to consult a good financial advisor, as the process depends on the type of plan you select.