Retirement is an exciting time and most people look forward to the days when they can relax and spend time travelling or being with friends and family at their leisure. It is a time to be rewarded for all the hard work that has been put in for the previous years. Yet you might have some financial setbacks that an equity release guide can help you solve.
Understanding the retirement laws and what can and cannot be done is important as well. The laws can become confusing and understanding them will make decisions much easier when retirement comes.
An important aspect of the retirement laws, know what can be done with a home, to have that money that is needed to have a comfortable retirement. There is now an equity release guide available that offer ways to have the money that is needed, while still retaining the home too.
Two Products for Equity Release
There are two different options when it comes to these programmes: there is the lifetime mortgage option or the home reversion option as well. The life time mortgage gives the home owner equity from the home and there is no payment to be made. The loan is paid back when the home is sold, or the last survivor has moved into long term care.
The home reversion option that allows the home owner to sell all or part of the home on a lease and the home owner will receive a lump sum or payments for life or even both can be done. Either way, these options can create the money that is needed in retirement.
Drilling Down the Specifics
• Home reversion requires you to be 65 years of age.
• Lifetime mortgages only require you to be 55 years old.
• With home reversion you sell property, but lifetime mortgage retains the property.
• You can live rent free for your lifetime with home reversion, with a lifetime mortgage you remain in the home until you die or want to leave at which point the mortgage must be repaid.
• With home reversion any portion of home unsold can be sold at your death for inheritance for your family. Lifetime mortgages depending on the size of the loan and interest may eat up the inheritance.
Let’s Talk Inheritance
There is no one out there who has children that does not want to leave a little something behind for them. By using a lifetime mortgage it is not impossible to leave an inheritance, but you do need to be savvy about it.
There is a clause in mortgage law that allows you to stipulate a portion of the home value for inheritance. You decide on the terms including the percentage. This percentage cannot be given in a loan and the interest accrual cannot exceed this total and drift into the inheritance portion. Your other option is to have an interest only lifetime mortgage where you pay monthly interest payments. In return the principle balance remains the same. At the end of your life or when you move the principle is paid by selling the home and any leftover value is given to your beneficiaries. It is a win-win situation when you plan to leave an inheritance.
Other Lifetime Mortgage Products
This short introduction to the guide you can read in further detail is also an outline of other lifetime mortgage products. The standard option is called a lump sum. It offers a lump sum of cash, tax free to use as you wish. You will have a fixed interest rate that accrues until the loan is repaid.
The next option is a drawdown mortgage in which you have a financial account to tap when you need equity funds. The interest charged is only on the amount of money used and not the full total available in the account. In other words if you have £10,000 and use £5,000, you are only charged interest on the £5,000 you have used.
A roll-up lifetime mortgage option is like a lump sum only you roll over from an interest online lifetime mortgage or another lifetime mortgage product into a lump sum with interest accrual just like the regular lump sum. It is a chance to remortgage.
Check the equity release guide for further details. You owe it to your comfortable retirement to keep updated and to learn all the intricacies of these financial products. If you read the guide your questions will be answered and you can also learn where to seek independent advice regarding these financial products.