Guide to Equity Release

Guide to Equity Release

Guide to Equity Release

Guide to equity release refers to the informative service available individuals contemplating the complex and difficult procedure of an equity release mortgage. It is essential for individuals seeking an equity release mortgage plan to contact a specialist adviser to receive a detailed guide to equity release. Equity release schemes are mortgages adapted for individuals over the age of 55. By speaking to our team of advisers, clients will receive an expert guide to equity release, including detailed descriptions of all the available equity release products, along with a recommendation on which arrangement will serve the most benefit.

An equity release arrangement continues until the borrower passes away, or is relocated to a care home for an indefinite period. Equity release schemes are available in two forms; lifetime mortgage schemes and home reversion plans.

Lifetime mortgage schemes present the borrower with an initial sum of money, securing a loan onto the plan holder’s home. A scheme that enables borrower’s to repay interest to the provider of equity release loans via monthly periods is known as an interest only scheme. Here, the mortgage is repaid after the contract has been terminated (at death of the borrower), whilst interest may be fixed or variable.

A scheme which grants the borrower with the prospect of repaying interest along with the mortgage at the end of the arrangement is known as an interest rollover scheme. Instead of monthly instalments of interest being paid by the borrower, interest is calculated on a monthly basis and added to the absolute mortgage payment.

A guide to equity release will include a guide to home income plans. Home income plans depend upon the borrower repaying mortgage and interest payments via monthly instalments. Borrowers may use their newly-found income to purchase an annuity, as it supplies the borrower with a lifetime income. The income from the annuity `could be used to pay the monthly mortgage payments. Interest rates are usually fixed on home income plans.

Lifetime mortgage schemes can serve a practical purpose as the borrower does not concede ownership of their property. Furthermore, any equity remaining in the estate may be put towards the borrower’s inheritance. Regardless of this, debts may become increasingly bulky if variable interest rates were to rise over the course of the deal. In particular, younger borrowers who have a higher life expectancy may experience the drastic effects of interest rollover schemes, as interest is given a many years to roll up. With the guide to equity release provided by our team of advisers, clients will be clearer on whether a lifetime mortgage will benefit their future plans.

Home reversion plans differ from lifetime mortgage schemes. Instead of the borrower repaying the total loan borrowed back to the provider, the provider obtains ownership to the borrower’s house. The borrower is merely a tenant, yet they are guaranteed lifetime occupancy within the home until they die. The borrower may arrange a full home reversion plan or a part home reversion plan. A full home reversion plan enables the provider to take on full ownership of the borrower’s property, permitting them to receive all of the proceeds from the sale of the house, after the borrower dies. A part home reversion plan gives the borrower the opportunity to sustain a share in the property. This allows the borrower’s beneficiaries to receive a proportion of the proceeds from the sale of the house.

An individual who deems equity release a suitable method for extra finance must be aware of the potential pitfalls associated with each scheme. Our specialist adviser’s aim to support each client in choosing an appropriate scheme by providing them with a guide to equity release, as well as assessing their current financial situation, along with their personal ambitions.

If you are interested in receiving a guide to equity release, contact one of our specialist advisers today.

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