An increasing number of people are worried about their retirement income. Interest rates are lower than ever before which has led to retirement income dropping considerably. A loan can be linked to an equity release schemes which can boost monthly revenue coming into a household…
Equity release plans mean that home owners can take a loan against their property to raise income for retirement. Such loans are increasingly popular due to the present unpredictable financial climate. Retired people find that releasing equity from property can be the only way to see them through their retirement years.
Choosing a suitable loan on a property is a major decision and financial advice should be sought before a decision is made.
It is estimated that retired home owners have vast amounts of equity in their properties that isn’t being used effectively. Some of this money can be used to increase retirement income. Taking out an equity release loan can mean not having to leave a much loved family home by using some of the equity from the property rather than moving elsewhere.
Are there any aspects of equity release loans that have to be considered? Yes, there are some essential questions to ask.
Equity release loans offer cash, either in a lump sum to invest which produces an income or as a monthly sum that is paid into a bank account. The level of income received depends on the value of the property, the loan being repaid on death or when the property is sold.
The property has to be freehold and applicants have to be within the age range stipulated by the loan company to qualify.
A check has to be made whether the property can be sold if the householder wants to move, perhaps to down size or move area.
The amount of money that can be raised has to be asked because the older the applicant when the plan is adopted means the less the revenue that can be raised in relation to the value of the property.
Anyone receiving state benefits should check to see if eligibility to these will change if there is an increased income from equity release plans.
A loan based on equity release means the value of the applicant’s estate is reduced which will result in less money being available to leave to surviving family as the property has to be sold and the loan repaid on the death of the applicant. This may be a consideration depending on individual circumstances. Historically house prices have risen over time but as seen recently, prices can also fall even if this may only in be in the short term.