Equity Release – Uses and Applications
If you are looking for a way to pay off your mortgage faster, or if you want the security of knowing that your children will be able to live in the house after you pass away, equity release may be an option for you. Equity release is often thought of as a type of reverse mortgage because it is designed to help people use their home’s value and increase retirement income. With equity release, there are no monthly payments at all; instead, a lump sum payment goes towards paying down the property’s debt. Use this free calculator to calculate the amount of that lump sum.
There are two types of equity release, the lifetime mortgage and the home reversion plan. With both these plans, a lump sum payment goes towards paying down the property’s debt. But with different methods for distributing that money to you over time. The lifetime mortgage is paid out in monthly installments until either your death or when no more payments can be made because all available funds have been used up. A home reversion plan pays out those same full sums but they’re sent directly to you as a single payment every five years during your retirement phase Â– which could last 25 or 30 years, depending on how long it takes for you to use up your financial resources (bank accounts) before you die.
If this sounds like something you would like to explore, talk with a financial advisor. Remember that equity release is designed for those who are not able or willing to pay off their mortgage before they die – and the process doesn’t require any monthly payments at all. The money from an equity release plan goes towards paying down the property’s debt, which means your heirs will inherit a home without any loan balance on it! If this sounds appealing, consider an equity release plan as part of your retirement income plans.