Equity Release Myths Busted

The popularity of Equity release has soared up in the recent years; still many people do not know how it actually works. It actually means an access to a portion of your home’s value in the form of a lump sum amount. This amount, plus the accumulated interest must only be re-paid after the home owner dies.

Choose your advisor wisely to get the most recent & correct equity release advice. 

However, misapprehensions about equity release still avert people from taking it into consideration. 

Here we bust the most common myths and describe how equity release can boost your finances. 

Number 1: I’ll not re-own my property

Equity release does not mean selling your house to the money lender. You simply borrow money against your property.  In contrast to a regular mortgage, a lifelong mortgage has no permanent end date; hence the mortgage continues until you need it. As number of money lenders limit choices for those aged over 50 years, this can be priceless for elderly house owners.

Number 2: I will owe more than my house’s worth in the end

If you borrow mortgage under equity release plan with an Equity Release Council approved provide, your agreement will accompany no-negative equity guarantee, which promises you’ll never owe more than your property’s value when it is sold.

In an unlikely affair that your house sells for less than the actual amount of the mortgage, the due balance will be written off. Generally, when the loan gets repaid the house owner or the beneficiary in the Will gets the remaining funds.

Number 3: I cannot release equity as I still have a due home loan

A due home loan does not mean you cannot release equity. Indeed, using your property wealth to get rid of an existing loan is most popular use of a lifetime mortgage.

Number 4: Nothing will be left for my loved ones

In the recent years, lifetime mortgages have become more flexible and a lot of plans are now available which lets you secure a party of your equity for legacy.

If an individual doesn’t want his loved ones to wait for the financial support until he passes away, he could use equity release to give them an early inheritance. However, bear in mind that utilizing a part of your equity now means you will have less available with you later and it will reduce the value of your property.

Number 5: I will be bound to make monthly payments with a lifetime mortgage

You don’t have to make monthly repayments with lifetime mortgage, unless you choose to do so, obviously. A few of the plans enables you to make penalty-free, optional repayments of up to 10% per year of the loan balance. 

If you choose otherwise, interest accrued on the borrowed amount will move up over time. This has to be paid only when the property is sold, either when you change to long term care or you pass away. If a equity release plan is taken out as a couple, the plan continues for as long as one of the couple remains in the house.

To get the best equity release advice get in touch with equity release advisers in your area.

Kindly bear in mind that, if you are in receipt of means-tested state benefits, releasing equity may affect your claim. Luckily, there are a lot of plans available to help you manage the impact of a lifetime mortgage.