Skip to main content

Equity Plan Advice

How Has Equity Release Evolved?

By Equity Release

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.

Contact Us

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.

Tips To Choose The Right Equity Plan

By Equity Plan

Choosing the right equity plan is essential for every homeowner. The equity plan you decide on should meet all specifications, so you never regret your decision in the future. As the criteria of each plan is varied, it is important to consider several aspects of the equity plan.

Essex Equity Release offer advice and tips for every equity plan, ensuring you have the information you need to make a good decision.

Long-Term Needs

When choosing our equity plan, it can be easy to think solely about the amount of money you are receiving. Whilst, in the short-term, this is a big priority, it is important to consider your long-term needs. A plan which offers the most money but has a higher interest rate may not help you in the long-term.

By finding a plan that does offer enough funds in the short-term, without having to make monthly repayments or a large lump sum with built-up interest, is always ideal in the long-term. Homeowners must consider which plans are best for now and your future, rather than focusing on the initial money received.

Switching Properties & Plans

Within the equity plan you decide, this will usually include criteria on whether you can switch properties or plans. Many of the equity release plans that are available today offer much better rates and specifications than previous plans. This trend could continue in the future so having the option to change your plan in the future could be ideal.

Whether you are looking to switch properties to a similar style or decide to downsize, this will also need to be included within the plan specifications. If you are considering downsizing, you should also think if there is a need to release an equity plan. Several equity release plans will be available that allow you to downsize. Finding a plan which offers more funds than downsizing would create is essential when you are switching property.

How Much Will It Cost You?

Whilst equity release does not have to be repaid until both you and your partner move out of the home or pass away, it is still important to consider how much each plan will cost you. The majority of homeowners want to leave an inheritance for their family. All our plans have a No Negative Equity Guarantee, meaning there is no debt that your families could inherit.

However, to make sure they receive inheritance once the house is sold, there are several factors to consider within the plan. This includes ring-fencing a certain amount of money you take out that can be left as an inheritance. Alternatively, you can choose to make monthly payments or an early repayment so interest does not build-up or find a plan that will leave you with leftover funds once the property is sold.

You may not want to make monthly repayments, however, this could be the best option for your needs.

Family Considerations

Your equity plan is specific to your requirements but talking to your family about your options is also important. Our team can recommend a suitable plan for your needs. Despite this, family can also offer good advice and make sure you are considering all aspects of the plan so that you make the right decision.

If you do not want to involve family, close friends can also be involved so you have a good understanding of every plan.

How Much Do You Need To Release?

The plan you choose should not always be what offers the most money. Before selecting your plan, you should think about exactly how much you actually need to release, rather than what is the most you could release.

If you try to release as much as possible, it may not give you the best plan for the future. By thinking about exactly how much you want or need, this can often lead to the best plan being chosen.

Contact Us

If you would like advice regarding equity release plans, get in touch with Essex Equity Release. Our team can quickly organise a suitable time to provide our consultation and give you any information needed. Make an enquiry and call us on 01268 799211 or fill in our contact form today.