When it comes to getting your hands on the cash you need, you have numerous options available. One of which if you’re a homeowner, is equity release. When used correctly, equity release can be a practical way of freeing up a lump sum. However, like all borrowing methods, it does have its disadvantages.
Here, you’ll discover everything you need to know about equity release and whether or not it could be the right option for you.
Who would most benefit from equity release?
There are a few eligibility factors you’ll need to meet if you want to benefit from an equity release. Firstly, you obviously need to be a homeowner! However, you also need to be at least 55 years of age and have a property worth at least £70,000.
When you take out an equity release you don’t need to move. Instead, you’ll be provided with a new lifetime mortgage which you may not pay off before you die. If there is still a debt remaining on the mortgage when you pass away, the lender will sell the home and take what’s owed to them before it can be split between any beneficiaries.
If you’re looking for a large lump sum and you don’t want to move, an equity release could be a good option.
Things you need to consider
There are a few things to consider before taking out equity in the home. Firstly, the amount you pay back on a lifetime mortgage may be more than it would if you had a traditional mortgage.
Another thing to think about is that a home revision plan won’t usually give you anything close to what the property is worth on the market. So, if you need a large lump sum and you’re not opposed to moving, it may be more financially sensible to sell the property rather than taking out equity.
What alternatives are available?
Taking out equity can make sense financially, but it’s certainly not right for everyone. The good news is, there are plenty of alternative funding options out there. You could get a much better deal if you were to take out a secured personal loan from a broker such as Ocean Finance. As an additional bonus, you wouldn’t have to move.
As you can see, there’s a lot to consider when taking out an equity loan. While it does have its advantages, it is a big decision to take out equity and there could be better alternatives available. Always consider whether taking out equity would be the best move for you before taking the plunge.