Equity release schemes have been specially developed for retired individuals over the age of 55. With the help & guidance of these schemes, homeowners can release tax-free money from their house in order to improve their assets in the later years of life. Additionally, lifestyle changes can be made which can result in the transformation & enjoyment of one's retirement years. The most notable benefit of these schemes is that they give you complete control over the financial value – also known as equity - which has built up in your home. 'Equity' can be described as the remaining cash value of your home after deducting the mortgage balance from the sale price of your property. If you are a homeowner above the age of 55, an equity release plan will give you a tax free cash amount or even come to you as regular income.
The workings of equity release schemes
The rules and regulations of equity release schemes as laid down by the Financial Services Authority(FSA) across the United Kingdom remain the same irrespective of the insurance or mortgage company. Whether the scheme offers you steady income for life or a lump sum, your home’s value will be used to repay the loan after your death or moving into long term care.
In most of the cases, you need to be nearing the age of 55 or 60 to be eligible for lifetime mortgage equity release schemes. In the case of home reversion plans the minimum age is 65, however more preferential terms are experienced the older the applicant.
At the same time, your property needs to be well maintained and the market value of it should be over £60,000. Preferably freehold, however leasehold properties will be acceptable with a remaining leasehold term of over 75 years. If not, the lease will need to be extended which can be completed at the same time as the equity release application. The costs of this will need to be covered by the applicant & more often than not will be paid for from any equity release proceeds.
The advantages of equity release schemes Equity release plans can give you a specific tax free amount of money or even a steady income for life, and in some cases a combination of both. These lifetime mortgage schemes offer a guarantee that you can remain living in your property until your death.
An equity release guide is available upon request & can list the many advantages & uses for the monies released.