Equity Release UK is Becoming Increasing Popular Amongst the Over 55s
Equity release UK is becoming more popular and this can be owed to many reasons, especially the up and coming lifestyles of the over 55s. Equity release is the process where you are able to release money that would otherwise be tied up in your home. The main ways to release equity are through a lifetime mortgage or a home reversion.
Reasons for Popularity
Equity release in the UK is becoming increasingly popular for people who are over 55. This could be happening because it has been found that many people over 55 still have a mortgage on their home to pay off. The money that’s released with an equity release can be used to pay off the mortgage, giving people the freedom to spend the monthly payments on themselves, rather than a mortgage. About 43% of people retire with a mortgage still to pay off.
An alternative reason that equity release UK is becoming popular is because life expectancies are becoming longer. This means that people are looking at taking an equity release scheme so that they are able to fund their retirement lifestyle to whatever means they feel comfortable with. The money can be used in any way that the homeowner likes. So if any retiree finds that they don’t have money to fund holidays or home improvements or general socialising, then equity release schemes can assist as long as it’s taken for the right reasons.
Ways to Use Equity Release
Equity release is also taken to pay off any outstanding debt that a person may have after they retire. These debts are usually on credit cards and loans. It is said that about 56% of people retire with credit card debts. Again, by repaying debt at interest rates in excess of 20%+ APR can only be sensible should the resulting best equity release interest rates only be around 6-7%. The question then to ask is whether you wish to continue making monthly payments as some equity release schemes do now allow you to pay money back! – check out Interest Only Lifetime Mortgage Plans.
Valuation of the Property Changes
Over the years property prices fluctuate and if the property prices are up, there may be more money that is tied up in the property. People are looking at releasing this equity before they die or are placed into care. It’s so that they can spend the money on essentials that were once off limits to them. The money is spent on improving lifestyles or their homes and this can be evidenced with the escalating property values in London. We are therefore evidencing an great increase in the number of equity release London applications for this reason. Many take on home improvement projects so that the house’s value increases. When the house is then sold, an inheritance might be more for their beneficiaries. The interest only lifetime mortgage is one option as you pay interest leaving only the principle amount at the end.
Products Available in Detail
Understanding the benefits of equity release and the valuation changes that properties undergo are just the beginning concepts of home equity release. You have two methods: home reversion and lifetime mortgage that must be defined.
Home reversion is a type of sale on the house. It is not a mortgage or loan. You actually take a percentage of your home and sell it. You receive cash for the sale, but still retain partial ownership. This ensures you live rent free in your home without worry until you decide to sell and move out or die. Many do not feel comfortable selling their home, but it can be a good idea if you prefer not to have a mortgage to pay at all.
Lifetime mortgages are reverse mortgage options where you make no payment until the end of your life or when you move to a new location. Since you have no payments to worry about but still own the entire house you might feel more comfortable. The downside is that most have to sell the home to repay the loan at the end, which leaves no house for an inheritance. Depending on the product, not as much inheritance cash wise is left either. It all depends on the amount of loan you had to take out, the interest rate, and the type of loan. Some lifetime mortgages make it easier to leave money behind for their beneficiaries.
People over 55 are looking at equity releases mainly to pay off any debts they have so that they can live a debt free life and not have to worry about outstanding payments after retirement. Over a fifth of retirees are taking an equity release UK schemes to clear debt. With a sensible approach and good equity release advice – why not?