Equity Release – Do you require extra money?
If you require extra money but do not want to move from your home, an equity release may seem like the suitable option.
Prior to jumping in, there are some things you may need to consider:
– Equity release is costly. Taking out a lifetime mortgage will often be charged a higher rate of interest than that on an ordinary mortgage, also you can rack up your debt if the interest is rolled up. Home reversion plans do not provide anything near the true market value of the home.
– There is a possibility that if you borrow too much money, you might not have access to the money you will require later on in your retirement, if you need to pay for any long-term care for example.
– Equity release can prove to make moving difficult; if you decide in the future that you want to downsize, you may not have enough equity in your home to do this.
On the other hand, equity release also helps a person financially throughout retirement, allowing them to spend the proceeds on anything they desire. There are no monthly payments and, under ERC rules, they have the right to remain in their own home, free of rent.
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