Equity Release Loan
Compare Equity Release Loan Options
Equity release loans are commonly used by elderly people and retirees who may wish to free up finances that are stored in their property. These policies are often selected by people whose pensions may be depleted, and in financial terms, are ‘property rich but cash poor’.
An equity release loan will essentially allow customers to either sell, or take out a loan against the value of their property that can be spent on anything they wish, with the added benefit that they will not usually be required to leave their home until after they have passed on.
If for searching for a suitable deal from a provider, it is important to consider exactly what type of agreement you will be best suited to before searching for quotes on an equity release policy. There are two main types of equity release loan that are available, details of these policies can be found below:
With a Lifetime Mortgage Agreement:
- A loan is taken out that is secured against the value of your home
- You may receive a lump sum that can be spent on whatever you wish
- No interest has to be paid on the loan whilst you live in the property, but interest on the initial loan will be taken from the
- sale of the property after you are gone.
In a Home Reversion Plan:
- Some of, or all of the property is sold to the provider
- You may receive a either a lump sum or regular payments
- As the property is directly sold off, you may remain there as a tenant
While these agreements may provide policyholders with a valuable alternative source income in many situations, it is important to remember that they may not be entirely suitable for everyone.
Although policyholders remain free to enjoy their retirement with an extra source of income, these agreements are not without their drawbacks. In order to set up an equity release loan, customers may be expected to pay some legal and valuation fees. Furthermore, the value of the property will also typically decrease after a portion of the estate is sold to the provider.
For more guidance on equity release polices, please see the link below for a competitive equity release quote.