Equity Release: Is Equity Release Right For Me?

Equity release allows you to gain back the value which you have invested in your property over the years. Like any other investment plan, the equity release plan allows you to sell off as much of your stake in your home as you wish to. In most cases, this plan can be used to facilitate current financial needs as once equity is released, it can either be taken out in a lump sum or in other cases, in tranches.

While equity release appears to be a great option for many, there is the need to understand whether or not this plan is right for you and for your home.

To remain on the balanced side of your financial needs, below are some of the most important considerations to put into perspective when considering equity release.

Is Equity Release Right For Me?

If you have decided on releasing equity from your home, then, you should first consider whether or not the plan will be the right fit for your needs and current financial circumstances. While you will have to seek professional advice from an equity release adviser, there is the need to also lookout for the best advisers as this can significantly affect the overall decision you make. In most cases, the equity release adviser may be able to compile for you an alternative product plan which are well suited to your current situation and needs.

Points To Consider When Planning on Choosing an Equity Release

When choosing equity release, below are some of the key points you need to consider as published on SovereignBoss.co.uk

  • The equity release on your property is repaid once you and your partner have passed away or been moved into an adult care facility for long term care. In this case, the plan provider sells off the property and the money realized is repaid.
  • The equity release plan is a big commitment which is made for life. This means that if you decide to pay the money back early, you may likely be faced with extra charges in the form of early repayment charges which overall will put a dent on your finances and also aggravate the overall amount due to be paid.
  • The decision to release equity from your home can significantly affect both your tax position and any entitlement that you have to state benefits. It is recommended that you first speak to expert advisers who are able to analyze the pros and cons of the decision to be made.
  • Equity release will overall reduce the value of your property as the plan provider will not offer you an exact value of your property during the process.
  • It is a wise decision to consult with major stakeholders such as family members and allow them be involved in the decision making process. Incorporating family members and other key stakeholders can help you gain the clarity needed to make the right decisions. Incorporating them could be in the form of inviting them on meetings with the equity release adviser – this also provides a great opportunity for them to learn more about equity release and how it can affect them, especially in the case of inheritance.
  • It is also recommended that you consider all possible forms of alternatives before deciding to settle for the equity release plan.
  • Speak to the equity release adviser and other financial advisers with regards to the equity release plan and with regards to securing debts against your home.
  • Taking a lifetime mortgage also exposes you to accumulated and compounded interest. This means that the total sum which you owe to the mortgage provider can grow sporadically over time.

Are There Alternatives To Equity Release?

There are several alternatives which you can consider in place of equity release. It is important to know the pros and cons of equity release and alternative plans, as this guarantees that you will make the best decision both for the short and long run.

The following Alternatives May be Better Choices as Compared to Equity Release;

  • Downsizing: Downsizing allows you to give up a bigger property for a smaller one while also giving you a price difference which may be enough to cater to your current financial needs. Additionally, the no monthly mortgage payment also eases your finances.
  • Loans or Traditional Mortgages: If you are sure you’ll be able to make the monthly repayments, it is a wise idea to take out loans from the bank or mortgage lenders to cater to the current and pressing financial needs.
  • Family and Friends: You can also speak to friends and family members regarding your financial situation and take as much help as they are willing to offer. One of the greatest advantages of securing such loans as this is that there are no accumulated interests to deal with.
  • Savings and Investments: Another option would be to liquidate investments or savings account to cater for the financial needs.
Jonny Millers