What To Know About Equity Release Mortgages

If you are reaching near retirement age and do not have sufficient savings to live on after you can no longer work, an equity release mortgage may be some great news for you. Without having to sell your life long home, you can cash in on its value to fund your retirement. Many persons find that they are able to live comfortably in retirement in their own home.

For most people, a home is their major investment. Most people plan to have their home paid in full by the time they reach their retirement years. This provides them with housing and no mortgage payment in retirement. However, without sufficient income to live on in retirement, quality of live is reduced.

With an equity release mortgage you have the ability to access the free equity built up in your property over the years. The equity from your home can provide you with either a lump sum, monthly payments or a combination of both to be spent as you wish. There are no ongoing payments to be made for the release of equity, but instead interest is rolled up against the borrowing, which is then repaid in full upon death, a house move, or a move into long term care.

If you want to have this type of mortgage to help meet your expenses you must be 55 or older. This will ensure that the monies you take from the home can still be paid in full once the property has been sold. There are two types of these mortgages, the roll-up and the home reversion plan.

The roll-up version allows retirees to borrow money which is secured by their home. Every year, the money received and interest are added to the value of the loan. These plans generally offer fixed interest rates that will not change over time. Once you or your heirs sell the property, the debt is paid and any remaining value goes to you, if your are alive or to your heirs.

The home reversion plan allows you to choose the amount of money to be received, by deciding of the percentage of the property that is to be sold to the reversion company. Factors that determine the amount you will receive include your current health, age and the value of your property. Once both you and your partner have passed on or if you decide to sell the property, the total of the mortgage is taken from the property sales proceeds.

Equity release allows you to have the money you need to enjoy your retirement years while still retaining ownership of your own property. As a property owner, you are not paying rent and not answerable to a landlord. You still have the freedom to use your property as you see fit. You have the freedom to have pets and overnight guests that you may not have as a tenant in a rental property. You can also choose to sell property at any time, but you must realize that the mortgage will be taken from the proceeds.

An equity release mortgage allows persons to leave an inheritance to heirs while still having enough funds to live well during their retirement years. The monies that you receive from the mortgage will help you to have enough money to meet all of your living expenses.

A Lifetime Mortgage is not suitable for everyone and so it is always best to seek independent equity release advice from a specialist to ensure you have all the information you need to make an informed decision about equity release lifetime mortgages and home reversion plans.