There are many different types of equity release plans on the market that will help many people make the right choice for them. Some of the most popular types of equity release plans include interest only lifetime mortgages as well as others such as drawdown & enhanced schemes.
Equity release plans are structured to include all sorts of people who lead different types of retirement lifestyles. Take a look at some of the equity release plans available below to figure out which one is right for you:
Lifetime mortgage equity release: The premise of this type of equity release plan is simple. The provider of the plan essentially gets paid back after the house is sold after your death or moving into long term care. This is ideal for people who want to protect their families after their death and it gives you the chance to have a capital lump sum, or income, whichever suits you.
Considering the types of economic times we live in at the moment, a lifetime equity release plan is a good idea if you are planning to inject cash back into your property, hopefully for an upturn in the market shortly. The reason why these types of lump sum plans are popular is because you can use the cash you get in one go for important uses as well as have money to live on. In essence you can spend the monies on whatever you choose.
Drawdown equity release plans: If you choose a drawdown plan, it gives you more flexibility and choice. This is because drawdown equity plans allow you to own your property completely. You take a initial cash lump sum, but NOT the full amount allowed. The monies set aside & not taken are held in reserve incase you require further funds in the future when you think the time is right. The advantage is that you are only charged interest on the cash you have actually withdrawn. This saves interest charges over the longer term.
Home reversion: With more studies showing that parents want to help their children get on the property ladder or proetct their inheritance, home reversion is a type of equity release scheme that allows parents to do exactly this. If you are over 65, you can give your children a chance to have their own inheritance because they can get it through selling a portion, or specifically a percentage of the home. You can also use home reversion to give yourself a stream of cash for your personal needs as well. Home reversions have declined in popularity, however still have a part to play in the whole scheme of things.
Top tip: Always look for the equity release plan that suits your lifestyle and requirements before you sign on the dotted line. Shop around to find the best equity release plan & negotiate with the lenders.
