An Explanation About The Different Types Of Equity Release - By: Jennifer Obodo

The equity release is getting more and more popular every day since many people realize how to get more benefits or their work once they get retired. Using the value of the house to help you financially is now quite common. The thing is that is must be repaid after the lifetime of the user, so it is the best option only for older people who don’t want to leave the house, and all the debts to their heirs. There are many types of equity release plans, and the following are most popular and used:

• Lifetime rollup mortgages – this equity release is designed for people over 55 who want to release some of their equity built up in their home, but don’t want to make monthly repayments. You can keep the ownership of your home and obtain a secured loan paid as lump sum or monthly income, and you can choose to give up your home during the lifetime or to pay nothing during yours and your spouse’s lifetime.

• Home income plans – here you can take out a Lifetime mortgage with a provider for a percentage of your property who in return gives you an annuity. The bad thing about this one is that you are committed to an annuity as a means of extra income, leaving you no choice of alternatives, and it can turn out to be more expensive in long term, so in that case better consider other option.

• Home reversion plans – in this equity release plan you sell the percentage of your legal home ownership to a provider and you get in return a lump sum or income and the right to live in your property for a lifetime. The percentage you receive depends mostly of your age and sex, the older people will receive the more money. The bad thing is that you will get only the percentage of the real market value of the property.

• Interest only mortgages – this type lets you pay monthly rates unlike the three types mentioned above. You will only pay the interest, not the capital to the lender, so you’ll be able to afford the monthly payments. The catch is that may be repossessed if you do not keep up repayments on your mortgage.
The equity release solution may not be perfect, but it has its great sides. For example, the money you get from the scheme will be tax free, you will be able to keep on living your life as before and that money can help you a lot if you want to clear some debts or go to holidays, or do anything you have always dreamed of, basically, you can spend the money the way you want it. It is true that this scheme is not for everyone, and if you want to apply for it, think about all the advantages and disadvantages first.

About the Author

If you are considering equity release then you will want an explanation about the different types of schemes that are available. Take advice from an independent expert after discussing the plans.

Article Directory Source: http://www.articlerich.com/profile/Jennifer-Obodo/162253

Additional Articles From - Home | Finance | Retirement