EQUITY RELEASE-A GUARDIAN MECHANISM FOR AGED PEOPLE
Equity release refers to a range of products letting you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.
Since equity release is for old people, usually retired, it is not easy repaying the loan. The good thing is you do not need to do so right away. Since you already used your property against the loan, you grant the creditor the right to sell it once you die or you move into hospital care.
Releasing equity takes on average around 8-12 weeks. Choosing a specialist equity release solicitor can help ensure your application runs smoothly and your money is in your bank account as soon as possible.
If you are still unsure if equity release is the right way to move forward, it is understandable. It is a significant risk involving your property. Therefore, you need to speak with advisers who will tell you what to do. These are the benefits of choosing an equity release adviser.
Now let’s discuss some of the advantages and disadvantages of Equity Release.
Advantages
- You can get a tax-free lump sum and/or smaller, regular payments to supplement your income, and can continue to live in your home until you die or move into permanent residential care.
- You may continue to benefit from any rise in the value of your property.
- You can still move to a suitable alternative property in the future, as equity release is transferable. It will be subject to your new home meeting the property suitability criteria applicable at the time.
- With a lifetime mortgage, you continue to live in and keep ownership of your home.
Disadvantages
- Equity release reduces the value of your estate and the amount that will go to the people named as beneficiaries in your will. Your estate is everything you own, including money, property, possessions and investments.
- With a home reversion plan, the reversion company owns all or a part-share of your home.
- Getting a lump sum or taking extra cash to supplement your income may reduce your entitlement to means-tested benefits, now or in the future.
- If you get care at home funded fully or partially by the local council, they may start charging you or ask you to pay more.
Prof. Dr. Lata Rani Mutti,
School of Management,
University of Engineering & Management (UEM), Jaipur