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Equity Release
Equity Release is a means of using the value of your home to receive either a lump sum of cash or regular monthly instalments, or a mixture of both. These plans are usually designed for those aged 55 or over.
There are various types of equity release, such as a Lifetime Mortgage where you can take out a loan, secured on your property, to provide either a single lump sum payment or an income for life. Typically no repayments are made until your home is sold, which is usually after your death or you leave your property because you need to go into long-term care.
Your age is the main factor in determining the proportion of the value of your home that can be released, but the older you are, the greater the percentage of the value that can be obtained.
Some of the factors you will need to think about are listed below:
1) Equity release plans are types of mortage, but are not regulated by the government.
2) Find out about all the fees and expenses that you will be faced with, including legal and valuation charges, as well as the set-up and annual charges for administering the loan.
3) Ask whether the plan has a negative equity guarantee, so that if the value of your home should decrease for any reason, the debt will also decrease.
4) If there is a debt outstanding when you die, after the sale of the property, check whether this debt will be passed on to your next of kin.
5) If you own the property with a partner, you will probably need to take out a joint plan to ensure that the debt can be reclaimed by the lender only after the death of the last surviving partner.
6) Check whether the lender will allow you to sell the property and move home if you wanted to do so, and whether any penalties apply.
7) Ensure that you keep full ownership of your home until your death or admittance into long term care.
For further information click here for independent mortgage advice and quotation.
NOTICE: A mortgage is a loan that is secured on your home and you also need to think carefully before securing any other debts against your home. Your home could be taken away by the lender and sold if you do not keep up the repayments on the mortgage or any other debt secured on it - if you are in any doubt, seek independent professional advice. These notes are offered as a general guide only and do not constitute mortgage or legal advice.
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