Is Equity Release Safe? If you are looking for information on how to make sure that you get the best deal on your lifetime mortgages then read this article. We will look at whether your lender is authorised to offer you these products, the criteria lenders have to consider approving your application and whether they are regulated by the Financial Services Authority. We will also look at some of the risks associated with this type of product. After reading this article you should be better equipped to decide if you should look into an equity release.
You may have noticed a lot of companies advertising themselves as offering complete equity release programs. These are often called tax-free schemes. What this means is that they allow you to borrow more than the amount the property would be worth under normal circumstances.
This is a great way of reducing your monthly outgoings, but there are two major attractions for using these schemes. Firstly, the repayment amounts are usually quite low. If you were to pay off all your mortgages, you would still have a significant debt, even if the value of your equity release is very large. However, by only paying the minimum required amounts you will pay a lot less each month. If you need to pay off a large mortgage sum, the lower the monthly payments mean that you could find that there is a large lump sum left over after you pay off the rest of the mortgage.
The second of the main advantages to tax-free lump sum purchases is that you do not need to make any further repayments on the home. As long as you keep up with the repayments on the life-time mortgage, you will never have to worry about repaying any of the money you receive from the sale of your property. However, the downside is that you could find that you will have to sell the home within a relatively short space of time if you choose to. This is because the lifetime mortgage typically only has a ten-year term, so it is very unlikely that you can expect to live in the property for this long without making a repayment on it. This is one of the major disadvantages to relying on these schemes, although you do have an opportunity to save on monthly repayments if you are able to hold onto your home for longer than the usual five-year lifespan of these schemes.
Most people are aware that life-time mortgages are popular type of scheme, and they rely heavily upon these to make their monthly payments. However, many people fail to realise that tax-free equity release and life-time mortgages are also available to home buyers who want to borrow more money on their property. These are much less popular than life-time mortgages, but they can be useful for those looking for larger sums of money to invest in property. Because they offer lower monthly repayments, you will not have to worry about repaying any capital that is left over in the long run.
It is possible that you could benefit from life-estate and life-time mortgages to some degree, as they can provide many advantages to those looking to buy a new home. However, before you decide which of these would be best for your situation, it is essential to seek advice from an adviser. Although most people who deal with these plans do have experience of these products, it is important to go through a thorough process with an adviser to ensure that you are completely aware of all of the options that are open to you. The wrong option can have disastrous consequences, which is why it is essential to get expert advice if you need it.