Now that mortgage lenders are seeking such large fees, many first-time buyers are now out of reach for the price of even the smallest starter home. This, plus the fact this house prices are now on the rise again, means that more and more parents are looking to unlock equity mortgages in order to provide the cash to help their children into the property market. If you’re looking for a way to get hold of the equity tied up in your home, here are the things you need to learn. If you’re looking for more tips, Equity Release Mortgage – SovereignBoss has it for you.
What is mortgage from equity release?
The equity release mortgage releases the interest that you have added to your property and turns it into cash that can be used for whatever reason you choose. These plans are applicable to homeowners who are 55 or older and typically do not require a monthly fee, they are repaid from the proceeds of the property’s eventual sale.
Why would you need to use a mortgage to unlock equity?
The price of houses has risen fairly steadily over the years, which has caused many older people to find themselves in a situation of having money tied up in their homes, but still unable to afford to help their children buy property or even pay for their own health care. A strategy to release equity helps them to realize the cash, but does not cause them to move away from home.
Which kinds of plans do you have?
Different providers offer different scheme types and the main examples are as follows. There are proposals for home reversion where you are selling the property but you still have the right to live in it. Drawdown lifetime mortgages are schemes where you keep ownership of the property and borrow against the value of the property when you need it, and a straightforward lifetime mortgage is one where you subtract all the equity value in one go. In any case, when the property is sold, the value of the loan, plus the interest, is repaid.
Are there any downsides to issuing mortgages for equity?
Equity release programs used to get a bad reputation because people didn’t really understand what they signed up for. But today they are properly regulated and borrowers register the terms well. You borrow money when you take out a mortgage release plan, and there will be fees and interest due there. That means reducing the amount of money your family will inherit, and selling the family home to repay the loan. Additionally, you can make sure that any money you receive doesn’t affect your state benefit payments.
How do you find the best mortgage to unlock your equity?
As with any mortgage form, each lender has its own unique schemes with different terms, different fees and interest rates and different degrees of flexibility. Many plans will still be open to you even if you are not in the best of health and if you wish, you can still move home with many. The best thing to do is speak to a financial advisor, tell them about your circumstances and expectations, and they can give you the best equity release strategy.