Equity Release For Pensioners
Many people who are facing retirement are often concerned about their quality of life after they have finished working. For pensioners, an equity release can be used as a valuable secondary source of income, or a cash lump sum that can be spent on whatever they wish.
There are two main types of policy that providers will offer equity release quotes on. The following is a brief explanation of each:
- Lifetime mortgages that allow customers to take out a loan secured against the value of their home, after they pass on, their home will then be sold to cover the cost of the loan, with interest included on top
- Home reversion plans, in which the customer sells the provider a percentage of their home, and continues to live in the property as normal until they pass on.
The money taken from an equity release can be used for a variety of different purposes other than just covering living costs. The following are some examples of other ways this money could be used:
- Paying for the cost of long term healthcare
- Taking a holiday
- Paying for home improvements
- Planning for inheritance taxes
Equity Release Drawbacks
Although an equity release policy may be a useful way of generating a secondary source of income, it should be remembered that an equity release may not be without its drawbacks.
If you are a pensioners, an equity release policy will usually automatically decrease the value of your estate depending on the size of the loan, and should therefore be carefully considered depending on the circumstances.
Furthermore, it is important to remember that the payment received in the loan may not reflect the value of the property, in terms of its current market value.
Please see below for more information and a competitive equity release quote