Finding the best equity release mortgage to fit your circumstances as a home owner is a task that can seem quite daunting. After all you are releasing equity from your home which is your primary asset. It is the reason you are considering this form of finance. You want to know how to go about getting an equity release mortgage and releasing the money tied up in your property.
Questions you may have about equity release mortgages should be researched as much as possible. If you are considering taking out this kind of equity release loan on your property, it is vital that you pose these questions to someone who is in the position to give you the best impartial advice.
If you have not yet identified the best equity release mortgage or have not yet made up your mind whether an equity release remortgage is even the right choice for your circumstances, ask yourself whether you know the answers to the following.
What companies offer equity release mortgages? Where can I get the best advice about equity release? How will equity release affect my family? Are there any alternatives that I should consider before getting an equity release mortgage? How much does it even cost? What are the potential risks involved in signing up for an equity release plan and how can I mitigate against them thus lowering the risk.
As with all posts in this section on finding finance, the information is specific to the UK equity release market. These articles are no substitute for independent financial advice so please ensure that you seek advice from a qualified and independent financial adviser before taking out any loan on your property.
Alternatives to Equity Release
Before deciding to get exchange the equity tied up in your property for a lump sum, have you considered alternatives? You could of course sell up and move to a smaller home, but perhaps you have lived in your home or community all your life and have many memories there. Selling up and moving away, may mean that you have to go far away from family and friends. There are alternatives to taking out an equity release loan.
Discuss these alternatives with your family and friends. Spend some time thinking about them before making your final decision. If necessary make a list of these alternatives and keep them to one side. Go over them again before you make your final decision.
Often just taking more time over such an important decision as getting an equity release mortgage may help you to finalise the decision that is right for you and your lifestyle circumstances.
Risk Factors you may need to consider
As with all forms of property loans, there are risks involved with this type of home equity loan. You need to consider what effect taking out a loan of this type may have on your tax status, your entitlement to benefits.
There is also the risk of fluctuation in the market value of your home, as well as the changes that occur in interest rates that could change the amount you pay back if you are using a equity release plan that requires some form of monthly payment.
When you have considered these risks, and worked out a strategy for mitigating against them, then you will have lowered the risk of losing out as a result of your decision to take out the loan.
Mitigating Risk is very important. Read this article on Safe Home Income Plans (SHIP) or do further research using a search for SHIP companies online, to find a company that will to an extent lower the risk factors involved.
Types of Equity Release Providers
You will find that most major UK mortgage menders offer some type of equity release loan. Indeed looking at the SHIP website you will recognise many of the well known names amongst their members.
Financial institutions however are not the only type of company involved in equity release. Often property investment companies can offer services related to unlocking the capital in your home. Search for “Types of Equity Release Plans” for more information about what different providers offer.
IMPORTANT NOTICE: I am not nor have I ever been an independent financial advisor. Neither am I registered under the Financial Services Authority. I am therefore not authorized under the Financial Services and Markets Act 2000 to offer investment advice.
The purpose of these articles are to inform, not to advise. Seek professional, impartial, independent financial advice from someone who is qualified and authorized before making the financial decision to take out an Equity Release Mortgage.