Home equity release-a good option?
Currently many old people haven’t got much money to live on. Their pensions may not cover costs adequately, or they want to raise the extra cash to enjoy retirement and go on cruises and holidays. Despite having little funds and pensions, they may possess large houses which are valuable assets with money locked in them.
Releasing home equity allows this money to be released, so the money can be used for home improvements, holidays or can be spent on the grandchildren, while being able to live in their own house. The other option would be to downsize, sell and buy a smaller, but that would be costly and may involve lots of hassle of finding a buyer and taking months to complete for instance.
Releasing home equity allows money to be paid in small, monthly amounts, or in one big lump sum. A lump sum which could be thousands will allow for large purchases like cars, cruises or holiday homes while smaller payments like a couple of hundred pounds a month may add to a regular income for extra groceries, heating or buying small gifts for the grandchildren.
To be eligible for an Equity Release Plan (ERP), a person needs to be at least 55 years of age, have a property in good condition with no outstanding mortgages or loans. They may be offered by individual companies or by larger monetary companies like Aviva or the local bank.
An ERP is good for any pensioners because it avoids downsizing, so no moving is involved to release equity, often there is no tax on the cash from this process, plus the equity released can be utilised if going into a care home, so the children don’t have the burden of paying these expensive bills and it also means not having to sell the house to pay for these bills. The ERP does not mean there is nothing left in the estate for the family inheritance, the house can be sold, the funds can pay off the ERP and there is still cash left over for the family.
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