Equity Release & What To Avoid
Equity release is often considered as an option for people looking to gain a lump sum or an added bit of extra income to supplement their earnings.
There are many ways you can do this, and it’s something that should be seriously considered as there are mistakes that can be made and easier alternatives too.
Below you’ll find all you need to know about equity release and what to avoid when taking it as an option…
What is Equity Release?
Equity release is a way in which people can gain a lump sum of cash by borrowing against the value of your home.
There are a number of different methods you can do this, and you don’t necessarily have to have paid your mortgage off in order to use them.
You can receive equity in one lump sum or via a series of payments, but as you are borrowing against the value of your property, you will have to pay interest.
A lifetime mortgage is one of the most popular ways to release equity and is for those aged 55 and over. This is borrowing some of your house’s value and paying back at a fixed rate.
A home reversion plan is another method of releasing equity and pays out a lump sum for a portion of your home, albeit at a below market price.
Rates will generally be around 5% but will vary from lender to lender, and it can prove incredibly expensive if you aren’t careful.
Top Equity Release Tips
Below you’ll find a series of tips to help you ensure that you use equity release responsibly or for the right reasons…
- Don’t borrow the full amount in one go: The more you borrow in one go, the more you’re going to have to pay for it. If you don’t need the full amount at once, take more out at a later date when you do. This will help you save on the interest you’re required to pay.
- Ensure the lender is above board: Ensure the company is a member of the Equity Release Council and follows their strict regulations. They must promise a ‘no negative equity’ guarantee, meaning you won’t owe more than your home is worth.
- Consider your benefits: Having cash rather than the property you own can affect the number of benefits you will receive and how much. Before taking equity release, check how much any benefits will be affected.
Are There Alternatives?
You can of course consider the alternatives. If you’re looking to make some cash quickly, but don’t wish to borrow against your home, you may wish to sell your home.
Here at Fast Cash Property we can make you an offer in as little as 24 hours with our Sell House Fast service.
We provide a cash offer and there’s no chain, just a quick move with all the solicitors fees paid for by us.
You can find out how it works by clicking here, while you can also get in touch and speak to one of our expert team who are more than happy to help.
To speak to one of our team, you can find all the ways to contact us right here.