Get to Know the Details of the Equity Release Plans
If you are looking for a regular source of income after retirement, you need to find the suitable financial solution for this purpose. Choosing an equity release plan on your property may be of considerable help in this regard. The objective of these plans is to unlock the equity on your property and generate a regular income from it.
Before you get any advice in this regard, here are a few things you need to understand.
Definition: The equity release on property is a financial solution that helps retired individuals’ avail of cash loan on the equity of their property. The different schemes available in this regard may offer a lump sum at a time or smaller amounts on a monthly basis based on your circumstances and requirements.
Eligibility: Your eligibility for equity release depends on the scheme of your choice and the scheme provider. Different schemes may have different policies regarding eligibility. Other factors that affect eligibility of candidates are as follows:
Your age – Most schemes are available for individuals between 55-70 years of age. If you opt for a scheme along with your partner, the younger partner needs to be of the eligible age, i.e., above 55 years, for such schemes.
Your property – There may be a minimum limit on the value of the property you want to get the equity release on. The higher the value of the property, the more you can get from its equity release.
Schemes: Different plans are available to release the equity on your property. You need to have an idea about the policy details before you choose one. For this, it is necessary to seek financial advice from a professional. The common schemes for equity release are as follows:
Lifetime mortgage plans offer you the option to take out a loan against the value of your property.
Home reversion plans offer you the option to sell off a particular percentage of your property to the financial service.
The terms and conditions differ as per the plan of your choice and your circumstances; however, most of them allow you to avail of either a lump sum at a time or receive payments in regular instalments.
Advantages: The chief advantage of opting for equity release plans is that you need not bother about money after your retirement. Whether you want regular income for a comfortable life or a lump sum for a financial emergency, the schemes offer you the required monetary support.
Another advantage of these schemes is that you need not leave your home when you opt for these. This is the reason elderly individuals prefer these schemes to enjoy their retired life. The financial service obtains the possession of the property only after the death of the participant of the scheme, or after he/she moves into a care facility.
Disadvantages: The disadvantage of the scheme is the reduction in the value of your estate. The amount you take out in the equity release plan is reduced from the estate you leave behind for your beneficiaries. However, if you want to ensure a comfortable and secure retired life, opting for the right equity release plan may be a suitable solution.
Author Bio
Sophia Webb is a financial advisor. She provides a brief overview of the way the equity release plans work towards the advantage of property rich but cash poor elderly individuals.
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