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Did You Know? Every 12 minutes a homeowner over 55 in the UK unlocks £91,667 tax-free cash.
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Equity release plans have been becoming more popular in the financial market. Although they offer you the financial freedom you need to have a fantastic retirement, they do have some drawbacks. These include:
- They lower the amount of inheritance you leave your family
- You miss out on the increasing estate values
- Your means-tested benefits are affected
- You might have to pay some hefty fees
So, if these plans aren’t your cup of tea, you should consider downsizing, asking for help from friends and family, or re-mortgaging.
Learn More: The Pitfalls of Equity Release
Well, the typical rate for lifetime mortgages is about 5%, even though some are usually under 3%.
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Well, you unlock between 20% and 60% of the value of your home (or for part of it). So, when you die or move into permanent care, the lender takes this percentage plus the interest accrued over the years. For the home reversion plan, you must ensure that you check whether or not you can release equity in several payments or one lump sum.
Learn More: Equity Release Quotes
The main drawback of taking an equity release plan is that it doesn’t pay you the full market value for your estate. You get far less cash than what you’d get from selling your home on the open market – although, of course, in such a situation, you’d still have to move to another house.
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