Equity Release - An Introduction

For most people the home they live in represents their major capital investment. As they grow older, many owner-occupiers find themselves in the frustrating position of having a very valuable asset on the one hand and a restricted income on the other. They are often concerned about the rising cost of maintenance and repairs. Increasingly, they simply wish to enjoy life a little more and even have a few luxuries. If you are in this situation, you may be able to use the capital value of your home to raise cash - while continuing to live in it - by taking out a home reversion scheme or a lifetime mortgage. Some schemes start at age 55 but the younger you are when you begin one of these plans the longer it has to run and the greater the care you have to take to make sure it is suitable for your immediate and anticipated future needs.

Since 1991 the major providers of safe home income plans have operated a Code of Practice. Companies complying with this Code use a ship logo on their printed literature, signifying participation in the SHIP (Safe-Home Income Plans) campaign.

Particularly over the last few years, schemes have become ever more popular as older homeowners have seen increased wealth largely locked up in their home.

As the schemes involve your rights in a lifetime investment, you must look carefully at the various plans, and the details to be considered in organising one, including the longer-term problems that may arise. The schemes are designed to be longer-term arrangements, so you have to be particularly careful to ensure that your decision takes into account a large number of factors.

Details of companies which run schemes enabling you to raise money from your home are available from a financial adviser who specialises in equity release. It is likely that not only will the equity release market continue to expand, but that at a future date the market and the advisers who operate in it will become subject to more regulation. It will be vital for you to understand the ways in which you can raise money from your home and the regulatory safeguards that may or may not apply to each of the schemes you might wish to consider. It will be equally vital to understand the status of the person who gives you advice, the range of products they can advise on and the basis on which they are to be paid.

Who is Equity Release Not Right For?

  • Equity release schemes will not normally be suitable for: people under age 55;
  • someone who wants to ensure that all of their property is 'saved' for the future;
  • anyone who does not want or need extra income or capital;
  • any homeowner who is not satisfied with the risks and warnings presented (eg having less to pass on to the family);
  • someone who is not prepared to accept the scheme's terms and conditions relating to the property (eg any restrictions on moving in the future);
  • homes which are of low value, non-standard construction, used for commercial purposes or in any way unacceptable to a lender; people who intend to leave the home unoccupied for extended periods (eg to live abroad for the winter months);
  • people for whom the benefits from an equity release plan do not usefully outweigh the loss of means-tested State benefits;
  • a homeowner who wishes to make interest payments on a standard mortgage;
  • and finally, but very importantly, anyone who would feel stress and worry to such an extent that the benefits would not make it worthwhile.

Equity Release Resources

Equity release uk With years of experience in helping the senior citizens encase the equity value of their homes; we can better guide you regarding the equity release schemes UK. Visit therightequityrelease.co.uk to be aware of the terms and conditions of equity release UK.

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