At the first look, equity release seems to be the solution to all your old age money problems. You get money against your house with no repayments to be made. And you get to live in the house too.
But you should not be blinded by the benefits. You need to get the whole view. Only then will you be able to get the best out of it. You should gather all the information you can about it and only then make the decision when you have all the details to hand and can fully understand your decision. You will find most of that information here.
This scheme allows you to get a certain amount of money depending on the value of your house, for as long as you are living in that house. You can get the amount as lump sum or in the form of regular payments. The money will be repaid, along with all the interest only after you stop using the property. That happens after you die or move to a full time care.
There are two forms of equity release. You can either take a mortgage on the house or sell it. These plans have few little differences. You can select the one that suits you. More than 90% of the people however go for the mortgage option.
The right scheme?
To get most of the benefits and least of the drawbacks of this scheme, you need to find the right lender. There are dozens of finance companies that provide this plan and they all offer plans with subtle differences such as different rates of interest, etc.
The debt in these schemes grows very rapidly and so you should try to keep the interest rate as low as possible. The rate of interest you receive depends on many different things – one of them is your age. It can also be negotiated in some cases. You should talk to a financial adviser before taking any decisions.
The question is not whether equity release is right or not – it is whether the scheme is right for you or not. Once you have taken money against your house, moving out becomes very difficult. You will first have to clear the debt so, if you are thinking of taking out this scheme, you should make sure that moving out is not your future plan.
You should also take a look at other options that are available. You need to make sure this is the right thing to do.