11 October 2017

A to Z of Equity Release

Equity release mortgage schemes provide a method of releasing cash equity on un-mortgaged value that has built up on property. The definition of equity means the value of your property that is not subject to a mortgage. Equity release mortgages are suitable for homeowners over the age of 55, who can use the equity in their homes to release a tax-free cash lump sum that can be used for any purpose such as home improvements, vacations, paying off debts, helping out loved ones etc. The best part of this type of agreement is that you can stay in your home for the rest of your life, or until you move into long term care. If you are considering the services of equity release in Somerset, then you should consider the services of professional financial advisors, who will provide information about lenders and their requirements.
There are two main factors that lenders take into consideration when deciding on equity release in Somerset. The first is the age of the applicant - who must be 55 years and over. This is because remortgage schemes are available to people under the age of 55. The next thing to be taken into consideration is the value of your property, as well as the amount of any mortgage that is secured. Based on these factors, an offer of how much equity is available to you is calculated.
There are two main types of equity release in Somerset - lifetime mortgages and home reversion schemes. The former is a loan facility provided where a lender lends a percentage of the value of the property and charges interest - where the loan plus interest should be repaid at the time of death. This type of mortgage does not require any monthly mortgage repayments, and there is no set term. Home reversion schemes involve selling a percentage of the value of your home in exchange for a tax free lump sum or a regular monthly income. With this plan, you remain the primary owner of the property. Repayment of this scheme is made either upon death or sale of the property.
There are many advantages of equity release - imagine having the ability to raise tax free cash for any purpose! Also, you can raise a cash lump sum or a regular monthly income, and you can make life decisions that are not based upon money. However, there are several disadvantages of equity release too. For starters, this will reduce the amount that you can pass onto your heirs. Also, these schemes are very complex and require the assistance of a specialist advisor to guide in the process.