In order to be able to choose the best equity release interest rates and deals, you must have sufficient information on the different types of equity release schemes. The two most common types of equity release schemes include the home reversion plans and the lifetime mortgages. If you are planning to consider equity schemes for your property, you must know the advantages of each equity release scheme. Once you know the advantages and you have sufficient information on the interest rates, you will be able to choose the right equity release scheme for yourself.
The lifetime mortgages allow you to obtain a loan against your property. The loan amount and the interest rate are affected by various factors in your life. For example, your health can make you eligible for a higher loan amount. The poorer your health the more money you can get. It is always advisable to contact an expert for advice when considering equity release schemes.
Home reversion is a different option altogether in equity release schemes. You do not have to find the best equity release interest rates when contemplating home reversion. It is not a loan, but an actual sale of your home. You sell all or part of your home for a certain value, which is under the actual value of the home. For example if your home is worth £200,000, the home reversion provider might offer you £180,000 for the entire house. You can sell anywhere from 20% to 100% of the house and live in it rent free for your lifetime. In this situation you do not have a loan or compounding interest. This can be an option if you are worried about the interest or mortgage you might leave behind.
Equity release mortgages ensure you still own your home. The fact that ownership remains yours is one of the many reasons homeowners consider going with a lifetime mortgage versus home reversion. Like any equity loan you have the ability to take out as much as you require based on fair market value, health as previously discussed, and your age. Age is an important factor with the two options you have. A lifetime mortgage can be obtained when you are 55 versus the 65 required for home reversion.
It is imperative that you compare lifetime mortgage schemes to find the best interest rate. Many providers of equity release offer interest rates that are up to 8%. The interest rates are normally calculated and compounded until the end of the equity release scheme. The interest will then have to be paid in full together with the initial loan amount. Some equity release schemes such as the interest only lifetime scheme allows you to pay the interest amount on a monthly basis, so in the end, only the initial loan amount will have to be repaid.
The standard lifetime mortgage is called a roll-up mortgage. You also have the interest only lifetime loan, enhanced mortgage, and drawdown. The enhanced lifetime mortgage is most beneficial for individuals with a serious illness. It is possible to access this mortgage before age 55 if there is a serious illness that reduces a person's lifetime. However, the standard age is 55. A person accessing the enhanced lifetime mortgage usually has to have a diagnosis in which no more than a year is left.
The drawdown mortgage allows you to take a lump sum and then monthly payments or just monthly payments. It is set up with a specific allotment amount for the equity loan, which one can draw on for a specific time frame before needing to re-evaluate. With this type of mortgage you only pay interest on the amount you have withdrawn from the equity account rather than the entire amount you were allotted.
When dealing with equity release interest rates, it is essential to understand the meanings of various basic terms. Learning some basic terms has been seen to be very beneficial. For example: APR stands for Annual Percentage Rate. Annual Percentage Rate or the APR is calculated by every lender. These lenders use a standard formula in the overall mortgage industry. The Annual Percentage Rate (APR) helps to determine the overall cost of borrowing.
To learn more about best equity release interest rates, it is essential to contact a real equity release scheme expert. These experts will help you to understand the various interest rates that are present in the market and will help you to obtain information and options that are the best suited for you.
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