Have You Heard About Equity Release? Is It for You?

As you move through youth to middle age and then old age, it becomes essential to build a nest egg that will seamlessly take you through your senior years. Outside of capital assets, a significant pension pot, and other passive investments, you can boost your financial ability through a specific amount of money, or a loan.

One of these loan policies is the equity release plan that allows you to keep your home while still receiving tax-free income from the third party or lender.  The mortgage plan is typically available to homeowners who are above the age of 55. Usually, at this age, a person will have raised a family, had a  fulfilling career, and might be looking to make the most of the empty nest. At the same time, such a person may be hoping to enjoy the better things in life that they were unable to when they were busy working to raise a family. Think of cruises, exotic vacations, eating out in expensive restaurants, and so on.

If you fall into this senior demographic, you probably already know that affording the tasteful things in life may come at a price. For instance, you may be looking to holiday in exotic and far-flung places, but at the same time, you don’t want to use up all your pension or rainy day funds. What to do?

When faced with such a scenario, equity release is your best option. So, how does equity release work and what qualifies its criteria? How do you are eligible for a plan? Here’s a guide to help you understand that.

Equity Release Criteria

There are various forms of equity release schemes, and they all come with their set of qualification criteria. The lifetime mortgage, which includes borrowing money against your home, requires that homeowners be aged 55 and above.

A home reversion arrangement, on the other hand, is when you sell all or part of your home and it requires homeowners to be at least 60 years of age.

Apart from age, your lender will also consider the estate’s market value. Your home should be valued at more than €70,000. Theoretically, there’s no maximum limit, but some plan providers set their limit to protect themselves from any risks.

Your estate’s condition is also something that plan providers take into account. You’re expected to have the estate in a pristine condition and ensure that you make regular maintenance rounds. If you have clutter or need to have any repairs done, your lender can decline your application.

Your home also has to be located within the remits of the UK. Some equity release lenders can opt to impose localised rulings as to where they can include the extremes of the United Kingdom within their remit. For instance, Northern Ireland is currently constrained to just two plan providers.

Therefore, it’s always best to seek financial advice before taking out a plan so that you can get the right information and guidelines.

Tips to Keep in Mind When Undertaking Equity Release

There are several critical pointers that you should always remember if you want to cash in your residence either through a lifetime mortgage or home reversion plan. First, speak to an equity release adviser so that you can get sound, professional advice before making this life-altering decision.

Always work with a provider who provides a ‘no-negative equity guarantee.’ That way, the amounts you owe will never exceed the value of your home. The guarantee scheme also offers assurance that you’ll always be in a position to offset your debts.

Your sunset years shouldn’t be a time filled with financial worries. By choosing an equity release arrangement, you can afford to maintain your lifestyle and live the best sunset years of your life!

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