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Home Reversions

The Benefits Of Equity Release

By Equity Release

Equity release is a fantastic option for many homeowners when used correctly. By viewing different equity release plans, you can find the right plan, taking advantage of the benefits of equity release. Read on for some of the biggest benefits of releasing equity.

Essex Equity Release offer advice regarding all equity release plans. We can also make a recommendation so you have a good understanding of the best plan for your specifications.

Paying Off Existing Debts

As you get older, you want to make sure that any existing debts you have from earlier in life are dealt with and fully paid off. Therefore, you can enjoy the latter stages of life without worrying about repayments.

By taking out an equity release plan, you will receive a lump sum of money. Whether the debts you currently have are small or little, you can use this lump sum however you like. You could be left with a lot of money once debts are paid off or only a small fund. Either way, this can get a massive financial burden off your chest, completely clearing debts.

Live In Your Home Rent Free

Despite receiving money for part of your property’s value, you will never have to move out. This means you can live in your home rent-free until you and your partner pass away or move into long-term care. With money still available from the equity release plan, this can give you a very comfortable living situation.

The more common alternatives to equity release is to sell your home and downsize, get a loan or decide to rent for the rest of your life and sell your home. Equity offers a much more suitable options and means you can stay in a home that you love without monthly payments.

Tax-Free Money

Benefits of equity release also include all money being completely tax-free. Regardless of how much money you would like to receive in your plan, you will not be taxed for any of this. This makes it a great option to receive the highest amount of money possible, as long as the plan is suitable for your specifications.

No Negative Equity Guarantee

No negative equity guarantee is offered by all equity release schemes approved by the Equity Release Council. This means, when you sell your home, the amount of money you owe to your provider will never be more than the value you sell your property for.

Even if your outstanding debt is more than what the property is sold for, you will not have to repay it. This ensures that homeowners who release equity will never be left in debt. Additionally, no debt can be passed onto children and other family members.

Spend The Money How You Like

Once equity has been released, that money is yours to spend how you like. There are absolutely no restrictions on what you can do with it. Whether you want to help out family members, travel a bit more or just live with financial freedom, the choice is completely up to you.

This means you can live a lot more leisurely if you desire. Meanwhile, also having the option of how you would like to make repayments. This gives you a lot more financial stability and power so you no longer have to worry about money.

Contact Us

For more information regarding the benefits of equity release and whether it is the right option for you, book an appointment with Essex Equity Release today. You will receive a fast response from our team. We will organise a chat at your home, our office, via email or over the phone. Call us on 01268 799211 or fill in our contact form to make an enquiry.

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.

Methods Of Equity Release Repayments

By Equity Release Repayments

Repaying your borrowed sum of equity release is usually the biggest worry for most homeowners. However, as there are now a number of different equity release plans available, this gives you several options when it comes to making repayments.

Essex Equity Release provide advice to all homeowners, individuals and partners. We make sure you fully understand the criteria of your plan and know how you can make equity release repayments.

Home Reversion Repayments

When choosing your equity release plan, you have the choice of both home reversions and lifetime mortgages. Home reversions are slightly different in the way you make a repayment. As a home reversion will mean selling part of your home to a third party, you are not actually borrowing the money and therefore there is no interest or loan repayment.

However, when the property is sold, the percentage owned by the 3rd party will go straight to your provider. This will mean you do not receive the full value for your property to then make the repayment. If your provider purchased 40% of your home’s value at the beginning of the equity release plan, this will mean they are owed 40% of whatever your property is sold for when the plan comes to an end.

Voluntary Repayment Plans

When looking to safeguard inheritance and control your equity release balance, voluntary repayment plans are an ideal option. This plan will give you great flexibility as, rather than the interest piling up, you can continue to make repayments each year without any penalty. Whilst this won’t be the best option for everyone, if you can afford to make early repayments it could be an easy solution for your repayments.

Voluntary repayment plans will allow homeowners to repay up to 15% of the amount borrowed each year. As no penalty is received with this early repayment, it can be a great option to ensure homeowners can pay off money borrowed from equity release as soon as possible. This type of plan is also a great alternative if you have been declined for an interest-only lifetime mortgage.

If you were declined based on affordability, voluntary repayments require no proof of income which could work in your favour.

Long Term Repayment

Traditionally, equity release plans have been created to provide you with a long term financial solution. With the majority of equity release plans that are used, you will be expected to make the repayment when both you and your partner either pass away or move into long term care. This means your property is sold and therefore the equity release will be repaid from the sale of the property.

The amount of equity release you owe will be based on how much you borrow and the interest that has accumulated over the years. This is why voluntary repayments can often be a great option as less interest may have to be paid. However, there are many suitable plans available that will ensure you do not have to pay too much when the house is sold.

Repayments Subject To Criteria

There are several other ways repayment may have to be made. This will depend on the criteria of your plan and what it allows. With some plans, you will have the option of making monthly repayments. Although equity release is commonly used to ensure repayments are not required for a long time, monthly repayments can be made if this is the best option for you.

If you need to make early repayments, this is also possible without choosing a voluntary repayment plan or monthly repayments. However, it could mean you will receive a penalty for making early repayments if this was not in the criteria. Alternatively, you can also find plans that will allow you to both move home or switch equity plans. This could mean that payments are required earlier to switch home or plans.

Contact Us

Essex Equity Release will advise you regarding the equity release plans available and how repayments are made. We can organise a quick consultation for all our clients. You can easily book a suitable time and location for you or complete consultation over the phone or via email. Make an enquiry and call 01268 799211 or fill in our contact form for a fast response.