Equity release schemes as a way to fund your retirement years

Equity release schemes are becoming an increasingly popular way for people to fund their retirement years and live life the way they wish to live it.

 

Equity release schemes, simply put, allow you to release the cash that is locked up in your home to spend as and how you wish. There are three types of equity release schemes on the UK market. These are called, lifetime mortgages, drawdown lifetime mortgages and home reversion plans. The three types of plans all come with their own benefits and drawbacks and can only be advised upon by an equity release specialist, who is fully qualified to advise on the equity release market.

 

A lifetime mortgage is an equity release scheme, which allows you to release cash from your home in one lump sum to spend as and how you choose, with typically no monthly repayments to make. The plan, plus all interest accrued, is paid in full when you and your partner pass away or move into long term care.

 

A drawdown lifetime mortgage works in a similar way to a lifetime mortgage except this time you are able to drawdown the cash in stages, as and when you need it. Interest only accrues on the amount that is released, with the loan, plus all interest accrued paid in full when you and your partner pass away or move into long term care.

 

There is also the option of a home reversion plan, which allows you to sell all our part of your home in exchange for a cash lump sum. This cash lump sum is yours to spend as you wish and there are typically no monthly payments to make on the loan. The plan comes to an end when you and your partner pass away or move into long term care, when your home is sold back to the home reversion company. This plan also enables you to protect a percentage share of your property so that you can guarantee an inheritance to your loved ones.

 

Equity release is a great way for you to live retirement the way you wish to live it, without having to worry about money. As more and more pensioners struggle to make ends meet during their retirement years due to the rising cost of inflation, coupled with the basic state pension not being enough to fund them through retirement, you can see why equity release is proving to be most popular. Equity release could be your way to financial freedom allowing you to use a cash lump sum that’s yours to spend as you wish without having to worry about the monthly repayments.

 

Many equity release companies recommend that you speak to an independent equity release adviser who can help you understand more about how an equity release plan works and what is involved. They can explain to you in detail about how much cash you could release from your home, whether your entitlement to state benefits may be affected and how the value of your estate will be reduced. It’s recommended that you should invite your family members along to any appointment with an equity release adviser, as an opportunity for them to ask any questions that they may have.