Home Equity Release Schemes Explained

Home equity release schemes have caught on and become more popular in recent years, especially in times of economic instability where money just doesn’t seem to go as far as it used to.

How can home equity release schemes be explained?

A home equity release scheme is a kind of loan that allows you to use the money represented in the value of your home. Equity can be released from your home either as a lump sum or through a series of instalments, helping to pay for daily expenses or accrued debts and interest. The lender of the money will later recover the equity released when you sell your property or after your death.

What are the benefits of home equity release schemes?

• Having equity released from property is particularly useful to older people who may be retired and no longer have the financial stability of a regular income.

• The money received from home equity release schemes is not restricted in its application and the homeowner who has chosen to release equity form their property can use this money however they may need it or see fit to use it.

• The equity receiver or receivers are able to stay in the home.

What are the dangers of home equity release schemes?

• You particular situation may not be suitable for equity release. There are a large number of home equity release schemes on the market, so it important to subscribe to a scheme that will best suit your particular needs.

• You may not be eligible for a home equity release scheme. Some of the criteria are that you have to be over 55 years of age, ideally be a freeholder, and have a property of a certain value (determined by the lending company).

• Taking our equity releases will affect the inheritance you leave behind for your loved ones. By taking value from your home, you are essentially using money that would otherwise be left to others when you die.

• If you are living with another person, they will have to find alternative accommodation when you die, as the home will partially be claimed by the lending company.

To find out whether or not you would benefit from a home equity release scheme, it is best to contact a professional consultant who will be able to guide you in this regard.