Getting your own home is a good investment not only in the present time but for the long run as well. While paying for the mortgage can hurt your pocket, for now, you will reap the benefits when you get older.
Some homeowners are not aware that they can financially gain from their homes once they reach the age of 55. With home equity release, they can access a range of products so they can get access to the equity or cash that’s tied up in their home. They can even choose to take it as a lump sum or get it as instalments.
By getting cash from the property you invested in when you were young, you will have better financial freedom or more money to handle when you retire. It’s a big commitment that can cost you if you don’t do it right. But with it, you can manage your finances better and live comfortably without having to look for a new home.
Equity release isn’t a new concept, and people have been taking advantage of it for years. If you want to explore this option yourself, you have two choices to choose from.
Lifetime mortgage
A lifetime mortgage is the most popular option for those who want to get equity release. It works by taking out a mortgage and using your property as collateral. You then have the option of allocating a fraction of the value of your property as general or emergency cash savings or inheritance. You’ll have the option to do a regular payment scheme, or let the unpaid interest go on top of the mortgage amount. The first option will give you peace of mind knowing you won’t be owing anything. The latter, on the other hand, would mean the mortgage amount and interest amounts will be deducted from your estate value when you pass away.
Home reversion
If a lifetime mortgage doesn’t sound too appealing for you, there’s another equity release option you can go for: home reversion. This means you can sell a fraction of your home equity for cash. You can also make the cash you get last you longer by opting for instalments. Some homeowners choose this equity release option because it means they don’t need to look for another house to live in because they can stay in the property without having to pay for rent. But like any other homeowner, you need to be responsible and make sure that the property is always in good condition.
Home equity release is a good idea if you want to make money from your property without having to move out and look for a rental home. You don’t even have to take the whole amount in one go because you can keep some for future use. And the good thing is, the value won’t change even if your property’s value fluctuates. If you’re strapped for cash and have a property to get a mortgage on, equity release is a good way to go.
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