Jun/090
Equity release explained
Equity release is basically cashing in on the value of your home. Though the schemes differ slightly, but generally they work by giving you a cash loan to the value of your home. This works one of two ways, you can either receive the cash in a lump sum, or its divided and given to you as a monthly payment while you continue living in the property. The equity release companies recover the cash if you sell your property, or following your death they will then sell your property.
It can be an attractive way of boosting your monthly income, however, once people have done their research it is usually found that equity release is not the best way in getting funds. There are many drawbacks to Equity release, not least the arguments caused by family who are looking to inherit the property. If you are an older person who has decided to release the equity in your property, you may not receive as many payments as someone who is younger, therefore you are losing out. This is because you could die before the payments have reached the value of your home. Also, if you are living with someone they may have to move out because of the conditions of the equity release. Equity release can also cancel out benefits you would usually be entitled to.
These are all things that need to be considered before releasing the equity in your home. You need to think if you can find the funds for your healthcare elsewhere.
I.e. can relatives borrow you the money? Would moving to a smaller home be better?
Jun/090
Equity Release MUST be Last Resort
Research shows that our care system is failing. Only the critical cases are getting care provided by the local authority.
Low and moderate needs are cashing in on the value of their homes to provide the necessary funds to receive care in their old age.
Equity release schemes are now charging fairer rates of interest than before in a bid to clean up the financial services industry’s act. However, equity must still be seen as a last resort and consumers are being urged to seek help from their families, or use savings to fund themselves. Even moving to a smaller property or taking in a lodger should be avenues considered before equity release.
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