Equity release is the ideal means of securing a lump sum or steady flow of income by unlocking the equities out of your property. In reality anything that has capital value can be put to good use through the ‘release equity’ program. It is a very good option for the senior citizens who are in dire need of financial support in the post retirement period. The catch is that the equity release provider will use your property to get back his dues usually after your death and you may not be able to bequeath anything to your heirs. If you do not have any qualm regarding this issue, you can surely opt for release equity schemes to secure your financial future in twilight days.
There are some advantages and disadvantages of equity release options. Let us have a glance over them. In the post retirement phase, feeble financial condition pops up as one of the major problems. We grope in the dark in quest of help and suddenly stumble upon ‘release equity’ option. By availing an equity release scheme, we can secure the tax-free cash or a steady stream of sufficient income. Apart from providing us with strong financial support in future, the release equity option also brings about a significant reduction in the volume of inheritance tax . The market interest rate is of ‘floating’ nature and when it dips, the borrowers are allowed to resort to mortgage refinancing. If the economic condition takes a nosedive, the borrowers are well protected by the ‘No Negative Equity Guarantee’ facility. None of the release equity schemes requires the retirees to move out of their properties, instead it permits them to live in the same house till they expire.
There are certain disadvantages of the release equity policies. In case, the property value does not go up by leaps and bounds and the increase in value remains much less than the interest level, then your heirs will inherit a very paltry amount of money after you die. If you are a very benevolent person and wish to donate something to any charitable organization, then release equity program will curtail the amount that you have planned to bequeath to charity. In spite of these pitfalls, increasing numbers of retired persons are in favor of the equity release option.
Release equity is available in myriad forms such as lifetime mortgage, interest only, home reversion, home income plan and shared appreciation mortgage. One should go for the scheme that suits his needs. The ordinary persons are not expected to have profound knowledge of these various release equity plans. They are also unaware of the offers made by different equity release companies. In such a situation, help of an expert advisor may turn out to be of great help for the laymen. Every intending candidate wants to know how much cash he/she can extract out of the properties. To quench this query, the income-providers have come up with the equity release calculator . This calculator computes the exact amount that one can have by taking out the equities and converting them into cash. Calculation is based upon the evaluation of the property value at ongoing market rate and also the age of the candidate. A well-maintained property brings you a substantial volume of money. So always try to keep your house in fine fettle as no lender is willing to incur loss by providing money against a dilapidated property.