UK equity release can be a good solution for financial problems for many pensioners and older home owners. As an example one lady was able to replace the kitchen in her bungalow by releasing some of the equity tied up in her home. Any financial decision like this may have many implications, and expert advice, with no obligation, will help individuals determine if equity release is an appropriate solution for them.
Many people in the UK have fully paid off the mortgage on their home, but they find that their retirement income is not sufficient to pay for the lifestyle they want, or they need to raise a lump sum for various reasons. These can include paying off credit card debt, financing home improvements or helping children and grand children financially, perhaps with a deposit for their first home.
One example of needing money for financing home improvements can be found in the case of a 68 year old lady from the East Midlands. She had already downsized her home to raise money for her retirement, but she found the kitchen in her new bungalow was rather badly designed and awkward to use. She did not have enough money to pay for a new kitchen, and the interest repayments made a personal loan unfeasible.
After contacting several equity release specialists she found the deal which she wanted. The equity release agreement provided more than enough for a revamped kitchen with quite a lot left over.
Equity release schemes work by unlocking some of the money tied up in your home. Generally the home needs to be owned outright (i. E. The mortgage should be fully paid off). There will usually be a minimum value required for the home. Seventy thousand pounds is a fairly normal amount for this so most UK homes will be eligible.
Companies offering equity release are responsible, and recognize that equity release is not the right solution for everyone. In some cases it may effect entitlement to state benefits, and it will reduce the value of the estate which can be passed on to beneficiaries in a person’s will.
It is always recommended that those considering equity release seek specialist advice. This should ensure that all the features and risks are fully understood.
A UK equity release scheme may be either a lifetime mortgage or a home reversion plan. A lifetime mortgage is a loan secured on the home. The loan, plus compounded interest, must be repaid when the owner dies or moves out (e. G. To a care home). The borrower remains as the legal home owner, and retains the rights and responsibilities of ownership. A home reversion plan differs in that the borrower sells all or part of the home to a third party. In return the borrower will receive a lump sum or a regular income (or both), and will have the right to continue living in the home for as long as they wish to do so. The borrower’s financial advisor will be able to provide a personalized illustration.
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