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Equity release



At first glance equity release plans can seem like a quick way to benefit from the equity that your home has gained. How it works is that the lender gives you money in exchange for interest and the eventual sale of the home. The lender depends upon receiving his payment to you plus interest back upon the sale of the home by you or by your relatives upon your death. The money can then be used for home repairs, upgrades, or a variety of different uses. It is useful for using equity to build more equity through upgrades and additions. However, this type of mortgage can be tricky, and is often not beneficial to the homeowner.

Plans for equity release can sometimes be complicated and poor value, often with hidden fees so make sure you read the fine print and talk to a professional before you decide upon this type of mortgage. There are different types of mortgages for the release of equity, such as lifetime mortgages and home revision schemes. In a lifetime mortgage, the lender gives you a percentage of your property’s value and charges interest upon it. Home revision schemes involve selling a percentage of your home to a lender. You can remain in the house until death or sell it, but when it is sold the lender takes a percentage of the price.

If you decide to take a plan, be careful. Assure that you can maintain possession of your home until death. Also in the case that your home decreases in value, make sure that the debt decreases in proportion to the home value. Another important warning is to affirm that no outstanding debt after the sale of your property will be passed on to relatives. Perhaps the best piece of advice is to speak to a mortgage specialist about your decision. He or she can provide alternatives, or show you the best way to go about getting the appropriate mortgage if that is what is determined the right thing to do.

Be sure to weigh your options beforehand. Plans should be treated as a last resort because so often they are expensive and sometimes detrimental. Look into other types of loans and speak to a specialist before jumping into this kind of mortgage. If you do, indeed decide that an equity release mortgage is the correct option for your life, be educated and careful about what type you attain, and what the conditions of the mortgage are.




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