Are you living in the UK? Are you in your retirement period? Do you own a property? Do you need an extra source of income? If your answer to the above questions is yes, then equity release UK is the solution that you have been looking for. You might be wondering to yourself what equity release is. Equity release is a way of releasing equity from your property.
Equity release schemes provide a number of benefits. One of the main advantages is that you are able to obtain a loan against your property or you are able to sell your property or a part of your property for income without having to move out of your property. You are given the opportunity to remain in your home even after you have released money from your home.
Home reversion is the sale or partial sale of your home in exchange for lump sum funds. It can also be set up in a monthly instalment. You do not retain full ownership of your home; however, you retain your right to live there through a lifetime tenancy agreement.
This is a loan option, where the house is under your ownership. You receive funds based on the equity you have in the home. This option works with instalment or lump sum payments too. The main difference besides retaining full ownership is age. With any of the lifetime mortgages you can be 55 years of age and undergo equity release options. Home reversion requires you be 65 years old.
Another advantage of equity release schemes is that the money that is released from your property is tax free. You will not have to pay any taxes from the money that is initially released from your property. However, if you use the money released from the property to generate additional income, the additional income will be taxable. Only the initial income released from the property is not taxable.
There are several different types of equity release schemes. The repayment of each equity release scheme normally takes place when the property is sold. The property is normally sold when you and your partner die or move into long term care. In such cases, you will no longer need to remain in the property. In order to repay the loan, the property will be sold.
• Home reversion is already partially sold, which is why the remainder of the property will be sold. It will be sold for the current market value; however, your remaining relatives will receive a slightly smaller amount of inheritance on the sale to cover costs the provider incurred during the lifetime tenancy agreement.
• Home reversion also has another option to the sale of the house. There is a clause in this type of equity release UK scheme that allows a buy-back of property sold. This option allows the homeowner to buy any portion sold, but at current market value and incurring costs associated with the closing of a loan. It is often ineffective cost wise, but it is an option you and your heirs should be aware of.
• Lifetime mortgages do not have to result in the sale of your home. Your heirs can use any money they have to pay off the interest and outstanding mortgage. The typical case is often that your heirs have no other option to pay the mortgage but to sell the house covering the mortgage. This is often why the myth of the property being sold no matter what came about.
Equity release schemes directly influence each aspect of your life. This is why you need to carefully consider all of your options before you opt for equity release as the solution. You need to consider how your children will respond to you opting for equity release. In essence, you are taking away their inheritance from them. Some children choose to repay the loan so that the property would not have to be sold to repay the loan. It is advisable to discuss the options with your children before opting for equity release.
Your family matters to you. With the different advantages that come along with equity release UK it is imperative you think about all aspects of the lending process. Discussing it with family is just one more step to figuring out what option is best for you and your circumstances. You can also seek legal advice through an equity release solicitor in order to ensure full understanding of the process.
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