More and more pensioners are opting for equity release schemes today, which allow them to release some of the value of their home to use as an additional income. There are some minimum equity release requirements, such as age restrictions and any equity release provider can explain these to you.
The advantage of equity release products is that you can use up some of the wealth tied up in your home but can continue living in the house. A variety of equity release products are available so one can find a scheme that suits their situation and needs.
The basic principle is that you take a loan against your home, or sell a notional part of your home. The amount you get is then repaid either through monthly interest, through no interest but when the home is sold, or through a combination of both.
There are risks associated with equity release products. For example, the mounting debt can result in completely devaluing your property against your loan, resulting in loss of inheritance for your family.
Another risk associated with equity release is that the younger you are when you get it, the longer you need to repay the loan, even if it’s an interest only scheme. Equity release is a versatile tool but should be considered very carefully before opting for it, and always explore all the alternatives that are available!
