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Equity release is increasingly popular with homeowners aged over 55. It enables them to borrow cash against the value of their home, with any interest deferred until they either pass away or sell their home.
Many people find this an attractive option; they may wish to carry out home improvements, help their children or grandchildren get onto the property ladder, or they may wish to supplement their pension for a more comfortable retirement.
Also referred to as a lifetime mortgage, equity release allows borrowers to take out a lump sum over a fixed period – or take it as regular withdrawals. The risk is that if you live for a long time, the sum to be repaid can be very high, as interest will build up. If this is likely to be the case, borrowers are able to make interest payments so that the sum doesn’t continue to grow. However, it is guaranteed that the debt will never exceed the value of the home and to achieve this limits are placed on the amount that can be borrowed.
There are several things that homeowners must consider before choosing equity release:
Make sure you get sound advice from financial experts who understand the products available and the implications of equity release.
Decide if you should consider downsizing if you need to release cash and your children have left home.
Make sure your existing lender doesn’t have a better deal available before making a change – a good mortgage advisor will be able to help you with this.
Make sure your family are in agreement that this is the best course of action.
Work out your budget and what income is required now and in the future.
Consider what type of equity release mortgage you need, there are several different options open to you.
The lower interests aren’t always the best ones; there may be hidden costs and fees. Your mortgage advisor will be able to help advise you.
Talk to our equity release brokers based in Northampton today to find out if equity release is right for you, and the most suitable products for your own individual circumstances.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.