This is a guest post from Becky
An Equity Release Scheme isn’t something to enter into lightly, and you really need to understand what you’re getting into before you sign up for one. There are three kinds of schemes, which will be discussed in this article, along with how they work and how to choose the right one for you.
What is an Equity Release Scheme?
With an equity release scheme, you’re able to raise money against the value (or equity) of your home, without having to repay the loan. There are three kinds of release schemes: lifetime mortgages (you repay from your estate after you die), home reversion (you repay with the sale of your home after you die or enter into long-term care) or draw down lifetime mortgages (instead of a lump sum, you can pull money out of the fund when you need it).
How an Equity Release Scheme Can Help You When you’re facing difficult times or life’s emergencies, an equity release scheme can really help you out. You can get all of the money you need by leveraging your equity into a lump sum in a lifetime mortgage, or just use a draw down mortgage to have the money there for you when you need it.
Who an Equity Release Scheme Works For
If you are considering a release in equity, you need to consider the consequences carefully. One of main driving forces behind an equity release scheme is retirement income. If you own your home in full, without a mortgage or excessive debts, a release scheme will work for you. But you do have to realize that you won’t be able to pass on your home or property to your family when you pass on.
Who an Equity Release Scheme Doesn’t Work For
An equity release scheme is prime for people who are retired, who own their own home in full and don’t have to worry about leaving an inheritance to their loved ones. Since there are three different types of schemes, you’ll want to choose wisely which one you use for your needs. If you’re not good with a lump sum of money, check out the disbursements scheme with a draw down mortgage. Either way you go, you’ll want to make sure you’re educated before you come to a decision about releasing equity in your home.
About the Author: Becky is an online lifestyle writer, with a keen interest in personal finances, thrifty living and ecological and economical solutions to problems. For more information visit her Twitter page @FreshHealth11