Many people do not realize how owning a property can be beneficial to them once they have retired. If you are a pensioner and own a property, you have what is known as unreleased equity. You have money but it is not available for use because it is in your property.
Sometimes the income that you receive from your retirement plan is not sufficient to meet all of your retirement needs. Maybe you would like to go on a vacation, maybe you would like to help your children or grandchildren financially, maybe you need to fund the education of your children or grandchildren or maybe you need to make renovations to your home. Equity release makes the release of equity in your golden years possible without the need to even have to make any monthly repayments, albeit this is now an optional exercise.
There are several different types of equity release schemes. The most popular equity release scheme is the lifetime mortgage that allows you to take a loan against your property. A lifetime mortgage offers you two repayment options. The most common repayment option is repayment of the loan total and accumulated interest by selling the property. This normally happens after the death of you and your partner or after you and your partner move into long term care.
The other repayment option is a monthly repayment of only the interest. A choice of repayment options is available on this now too. For instance for those who would prefer the discipline of regular fixed monthly payments, lenders such as Stonehaven & their interest select range would suit. Additionally, we also have lender – more2life who offer an Interest Choice product which in essence is based upon the innovative Stonehaven Interest Select range.Finally, we have the Hodge Lifetime Flexible Lifetime Mortgage plan which is taking the industry by storm with its plethora of features; downsizing protection option & the 10% repayment option. This product is covered by clicking here.
The initial loan amount is once again repaid by selling the property after you and your partner die or move into long term care. This type of lifetime mortgage is known as the interest only lifetime mortgage.
The other type of equity release scheme is the home reversion plan which gives you two options. You can choose to sell your property for a lump-sum or a monthly amount or you can choose to sell a part of your property for a lump-sum or a monthly amount. Regardless of which option you choose, you will be allowed to stay in your home until the death of you and your partner or until you or your partner move into long term care. Selling a percentage of your property does not always sit comfortably with everyone. However, Home Reversion Plans do still have a part to play & particularly in times of static/reducing property values where roll-up schemes can be a concern.
As you have seen, one of the best ways of financially securing your future is by owning a property which you can later user for the release of equity in your golden years. With careful planning & developing an income in retirement strategy, your property can form the basis of securing a water hole to replenish used savings during retirement.
To discuss any areas relating to lifetime mortgages or home reversions further, contact EquityRelease2go.com on Freephone 0800 321 3156 where an adviser would be glad to discuss your options.