Talking about money can make people feel uncomfortable and/or anxious. This is understandable, but it is important that people know how to best manage their money so that they can improve their finances and create stability in their life. This article will hopefully help people to start talking about money starting with equity release.
What is Equity Release?
So, what is equity release? Essentially, this involves releasing some of the equity (value) that is tied up in your home. Equity release is available to homeowners over the age of 55 and can often be a great way to gain access to a large sum, but it is also a major financial decision and not one that should be made lightly. The key benefits of this are that you can continue to live in your home and retain ownership and benefit from rises in property value.
How it Works
So, you’re maybe wondering how equity release works? It can be a complex process and one that needs to be guided by an equity release adviser that will be able to take you through each step of the way. You can either take the money as a lump sum and/or in smaller amounts over time (known as drawdown). There are a few different types of equity release with the most common being a mortgage that is not paid off until you die. This is known as a lifetime mortgage where you borrow at a fixed or capped interest rate – currently, average interest rates are around 4%, which is the lowest that rates have been for many years.
What are the Requirements?
To qualify for equity release, you will need to be a homeowner with property in the UK that is worth a minimum of £70,000. You must also be at least 55 years old and have little or no mortgage left on your property.
What to Look For in a Supplier
Equity release is a major financial and lifestyle decision and not one that should be made lightly. You will also want to make sure that you are in a safe pair of hands, so you need to take your time to compare advisers. You should make sure that they are a member of the equity release council and spend some time researching advisers online, including seeing what people’s reviews are (look beyond the reviews on the website).
Equity release can be a great way for homeowners to boost their retirement finances whether this is to improve the home, go on holiday or simply to have a little bit more breathing room. While in some cases it is the best option, it is also a major financial decision and it is a good idea to contact the financial ombudsman or citizens advice bureau to find out more.