Equity release has significantly grown in popularity over the past 3 decades and is now a very sustainable and safe option for homeowners. There are several differences in equity schemes to when they were first made available and why they are now such a good option.
Essex Equity Release provide advice to all homeowners. We work with a number of providers to deliver the best schemes and plans for you.
What Was The Problem With Equity Release?
Equity release schemes have been available in the UK for over 30 years. Beginning in the 1980s, the products and schemes that were available caused problems for future development. The schemes that caused difficulties were home income plans. It was predicted the plans would bring significant reward for homeowners, as property value world increase and inflation would be higher than mortgage interest rates.
Homeowners were also advised to invest their money from equity release into stock market bonds. However, this produced poor results. As interest rates rose and property values fell, it left many homeowners to have growing debts due to equity release, rather than being a successful scheme to help homeowners.
Despite this, these schemes are no longer the same. Equity release is a much safer and more beneficial option for homeowners and will provide you with the financial security you desire.
Difference In Opinions
Due to the plans that were available in the 1980s and early 1990s, it meant there was no cap on interest accrued. Homeowners could end up owing everything from the sale of their home and having debt after that.
Nowadays, plans that have been approved by the Equity Release Council ensure there is a no negative equity guarantee. This means the repayment will never be larger than the value your property is sold for. There is never any debt for both homeowners and their children or family members, giving you complete peace of mind over the safety of equity release.
You will also have the option to protect any inheritance you want to leave from the equity release plan, along with leftover funds from the property sale.
How Has Equity Changed?
Equity has changed so there are now two types of popular equity schemes. These are lifetime mortgages and home reversions. Lifetime mortgages mean you do not have to make repayment whilst you are alive or living in your home. The interest will roll up and only has to be repaid when both you and your partner pass away or move into long-term care. This means the house can be sold before any repayment is needed.
Home reversions are slightly different, as you sell a part of your home. A lender will purchase a percentage of your home. When the property is sold, the lender will receive the value for the percentage of the property purchased. The payment you receive could be lower than market value for your home. When it comes to being sold, the lender could receive more money.
Equity Release Plans Today
As of 2017, £3.06bn was extracted from properties according to the Equity Release Council. Increasing by £909m in 2016, this demonstrates the growth in popularity and the reliability of using equity plans in the modern age.
Equity plans have also become more varied, giving you more options suited to all individual specifications. As equity continues to drop in price, you can find beneficial plans for your finances. Meanwhile, you do not have to spend too much money now or in the future.
For more information regarding equity and why this is a safe option for you, contact us today. Essex Equity Release will always provide a fast response, organising a suitable time to visit you at an ideal location. Organise a consultation today and call us on 01268 799211 or fill in our contact form to make an enquiry.