Here Is How Equity Release Are Able To Provide You With A Worry Free Retirement.
Inflation is most likely the biggest enemy of the pensioner. When you retire with a fully paid-up home and a sizeable amount of money in the bank, you always think that you have enough to sustain you for the rest of your life. Very often inflation eats away at your nest egg and soon you may find that you can no longer meet your monthly commitments. The good news is that there’s no reason to live in poverty for the rest of your days; with something called equity release you can now have a comfortable old age without financial worries.
There’s two different kinds of equity release programs in the UK. The first one is referred to as a lifetime mortgage and the second one is called a reversion plan. We will briefly discuss both these options.
If you have a fully paid-up home, a lifetime mortgage is a very good option for you. What happens here is that you take out a bond on your house and re-invest the money so you can get monthly income from the interest on the capital. But what about the bond repayments, you will no doubt ask. The good news is there isn’t any. The interest on the loan is simply added to the bond every month and one day when you die the property is sold and the bond repaid.
The nice part is that there is no bond repayment involved: the interest on the loan is simply added to the capital each year and one day when you die the lender sells the property to repay the loan.
One negative implication of this is of course that your family can’t inherit a debt-free home, since the house has to be sold to pay the outstanding loan. At least the equity release mortgage will never get bigger than the market value of the property – this is guaranteed by a feature of all SHIP loans called NNEG – the No Negative Equity Guarantee.
The second type of equity release, known as a reversion plan, means that you will be selling all or part of your property to someone else in return for the right to stay on in the house or apartment for the balance of your life. Depending on how much the property is worth, you will also receive a monthly income.
Before you sign up with a lender, make sure he belongs to SHIP – the Safe Home Income Plans group. There are some unscrupulous operators in the market and you don’t want to end up in the hands of one of them.
For independent advice about Equity release mortgage , just click one of the links Equity Release Schemes | Lifetime mortgage
