Are over 55+, a homeowner with a house worth €100,000 in the UK? Have you been working at your restaurant and taking care of your grandkids and just need a break? Have you been looking forward to visiting the mountains of Tomintoul and Glenlivet but don’t have the funds you need to cater for this trip? Have you been hearing your friends asking around about what’s equity release and didn’t have a clue about what it is? Well, don’t stress. You can drop your grandkids at your sister’s house and start packing up because equity release1 is your gateway to an unforgettable time at Tomintoul.
Equity release is simply a mortgage plan that allows you to unlock the capital tied up in your house. The scheme is targeted at homeowner aged 55+, those within the remits of the UK and own estates worth more than €70,000 – meaning you’re already qualified. The financial product also offers you two options, the lifetime mortgage plan and the home reversion plan. What makes this plan worth the effort is that you don’t have to make any monthly repayments and that you repay the loan amount (plus interests for the lifetime mortgage scheme) when you die or move out permanently. You also have the right to remain in your estate as long as you wish. How awesome is that?
Well, that’s not all. Equity release plans also offer you the financial freedom to do whatsoever. So, if it’s that trip to the Whisky Castle in Glenlivet, the Tomintoul Art Gallery or even a trip to various towns in Scotland, then you can easily fund your vacay with equity release. You can also choose to pay off your debts, outstanding mortgage, your long-term care, or even make any home improvements.
You can also choose to move homes if you want to. Nonetheless, you must ensure that your new estate meets the requirements outlined by your plan provider. You must also ensure that the house is in pristine conditions, as some lenders are particular when it comes to the estate’s state. Lucky for you though, you can’t be charged more for moving houses because the Equity Release Council2implemented the no negative equity guarantee. The scheme protects you from paying more than the value of the home and also enables you to transfer your equity release scheme to another estate without incurring any penalties.
Another incredible perk of having this scheme is that it’s safe. Decades ago, most people were victims of quacks who were exploiting homeowners with unregulated equity release schemes. However, today, the Equity Release Council governs these financial plans while the Financial Conduct Authority3 regulates them, thus making them secure. As per some of the ERC’s stipulated guidelines:
- All interest rates on equity release plan must be fixed4, or if not, the plan provider must have an upper limited or cap that’s safe for the lifetime of the loan.
- Any lifetime mortgage plan must come with the ‘No negative equity guarantee5.’ It means that when your lender puts up your estate for sale, and solicitors and agents’ fees have been taken into account if the amount left isn’t enough to cater for the loan, neither you nor your estate will be liable to pay more.
- The Council also demands that you can only take out an equity release loan if you get proper financial guidance and independent legal advice.
So, as you can see, equity release is an incredible financial plan. All you have to do is get to the financial advisor’s office and start planning for your once-in-a-lifetime trip to Tomintoul.