Home sweet home: equity release and all you need to know!

April 30th, 2010 posted by admin
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Home sweet home: equity release and all you need to know!

When you hear words like equity home income plans, lifetime mortgages and home reversion plans, don’t be confused. Baffling and different as they might sound, these terms refer to the same thing – home equity release schemes. Now you must be wondering what on earth that is! This is actually a simple concept which is kind of opposite to the idea of a mortgage. It is actually frustrating to possess money and yet not be able to spend it and it is estimated that people over 65 years have a ridiculous 50% wealth tied up in property!

The process itself is simple. After the age of 60, you can receive money from a lender as your retirement income in return for a pre-determined share in your property. Home equity release schemes work in two ways depending on which scheme you prefer for yourself. These are:

· Reverse mortgages – these schemes let you borrow against the value of your property. Repayment needn’t happen before you move or die. Interest keeps adding on though!

· Home reversion schemes – with these schemes, you can sell your entire home or part of it at a discounted rate. Depending on your age, you can borrow anywhere between 15 and 40 percent of the value of your house.

If Baby Boomers are wondering what implications home equity release has for them, then they be rest assured that the news is good. Certain baby boomers find themselves attached to where they have lived all their life. In such case, releasing some of the equity in their family home can help them maintain their desired lifestyle. Also, baby boomers have lived a life better that that of their preceding generations and their most valuable asset is their home. In such a scenario, most of their money is blocked in the property and releasing equity can help them live in splendor.

Getting the aid of independent lawyers for sound financial advice, choosing the most appropriate products and assessing future needs beforehand will ensure that you make the most of home equity release.