Sunday, 8 March 2009

EQUITY RELEASE - IS IT FOR YOU? PART 2

So what exactly is an equity release sceme?
Well, there are two main types of plan: home reversion and lifetime mortgages .
A lifetime mortgage is a loan against the value of your home but repayments are not usually paid until the property is sold.
Reversion schemes involve selling part or all of your home to an equity release company but continuing to live in it rent-free. When you die or perhaps need to go into permanent care, the property is then sold and the equity release company take their percentage from the proceeds.
These schemes have a minimum age limit for applicants, varying from 55 to 70 years. You must own your own home outright, or have very little mortgage on it and it must be in good condition and worth at least £50000.
Applicants to such schemes should be aware that, as the providers of equity release are businesses and as such require to make a profit, it may be unlikely that the scheme will profit the applicant in the long term. The advantage to the applicant is a lump sum at a time when it is perhaps most needed.
Read more in Part 3 - what do you need to know?

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