Compare Equity Release Options With Money Pug
If you are considering releasing equity from your home then you have come to the right place. Money Pug can help you to decide whether equity release is the right option for you, and if it is, to select the best option for equity release that is available to you. Compare equity release options from a wide range of providers and discover which is the best one for your particular needs.
Things to Consider Before you Choose Equity Release:
- Equity release is repaid once you and your partner have either passed away or moved into long-term care. At this point the home is sold and the money you owe is repaid to the provider.
This means that equity release is a huge commitment – generally made for life. If you want to repay early, you are likely to face an early repayment charge levied by your provider.
- Equity release will reduce the value of your estate.
- Both your tax position and any entitlement to state benefits could be affected by the decision to release equity from your home.
- It is recommended that you consult with your family about releasing equity and allow them to be involved with you in the process.
- If you take out a lifetime mortgage, it will accumulate compound interest so the total sum you owe can grow quickly.
- You should always think carefully before securing any debt against your property.
What Alternatives Are There To Equity Release?
Equity release may not be the right option for you. There are alternatives which you may also wish to consider. These might include:
If you are cash strapped, you may be able to buy a smaller and less expensive property without the need for a mortgage. This can often release extra cash and having no monthly mortgage payments will give you more money to work with on an ongoing basis.
- Loans/ Traditional Mortgages
If you will be able to make the monthly repayments, a loan or traditional mortgage could be another way of releasing funds. Though it has traditionally been difficult to get a mortgage if you are over 50, there are now more options available that are specifically targeted at older people.
When looking for funds, don’t overlook the idea that friends or family may be able to help you with shortfall you are experiencing. Don’t be afraid to discuss your financial affairs with those closest to you. Often, you will find they are more than happy to help you out if you are experiencing any difficulties. Multi-generational living and multi-generational co-operation and increasingly important in a society where so many are struggling to make ends meet.
Unless you are receiving a regular income from investments upon which you rely, any savings or investments should be your first port of call when looking to cover your financial needs or wants.
- Taking Advantage of Unclaimed State Benefits
If you are struggling financially, it is important to look into whether you are entitled to state benefits that you are not currently claiming. Many people are entitled to state benefits that they do not know about and therefore do not claim. Make sure you are not one of them before you consider releasing equity from your home to meet your needs.
What Types of Equity Release Are Available?
Equity release is all about releasing money from your home, but there are different ways to go about doing so. The different options have their own pros and cons, so consider carefully which type you might go for:
The lifetime mortgage is the most common type of equity release. In this type of plan, you are basically taking out a secured loan against your property. These lifetime mortgages allow you to release a lump sum payment or, in the case of a drawdown plan, to release smaller sums as required after the initial release. Types of lifetime mortgage include:
- Drawdown Lifetime Mortgage
Access smaller tax-free lump sums as and when you need them. Only accrue interest on the amount that you have released.
- Enhanced Plans
Allow you to release more money from your home than most lifetime mortgages. Available for those with certain health conditions, or those who make certain lifestyle choices – ie. Are smokers.
- Interest Payment Plans
If you have the means to pay the interest you may wish to make regular monthly payments in order to retain as much of the property’s value as possible for future inheritance.
- Protected Plans
This additional option allows you to ring-fence a portion of your property’s future value to be passed on as inheritance.
Home Reversion Plans
With a home reversion plan, you are selling all or part of your property to the plan provider in return for a certain sum. Ownership of the home in this type of home equity release will pass to the reversion company. There will be no interest charged on a home reversion plan and you can stay in your home for as long as you want. But it is important to note that you will not get full market value for your property, and your estate will not benefit should the home increase in value. If you do not sell the whole property, you will still be able to leave your share of the home as inheritance, and your estate will benefit from the increases to this percentage of the property’s worth.
Is equity release right for you? Compare with Money Pug today to make sure you get the very best deal for you and your circumstances.
Equity Release FAQs
Before you compare and choose an equity release scheme, it is absolutely vital that you make sure that it really is the best option for your needs and circumstances.