Many people find themselves looking for ways combat the cost of living whether they need a debt consolidation solution or not. If you are retired and own your own house, you may want to consider an equity release scheme.
What is an Equity Release?
An equity release uses the house’s value to get money. Consider an equity release because it could provide you with a lump sum, an additional monthly income, or help with tax planning purposes. There is a catch however. The money has to be paid back at a later stage, usually when you die.
An equity release is ideal for senior citizens living off their pension, who may be struggling financially. It may also be a good option for those who do not wish to leave a large estate. Money has never been this tight, and an equity release may lessen the burden of any financial problems.
Why live your later years in poverty when you’re sitting on an asset worth £100,000s. OK, your children may not be too happy at your spending (as they put it) their inheritance, but as they say you can’t spend it when you’re dead. Even some millionaires say then plan to die penniless?
But there are some things to consider before deciding on an equity release scheme. Remember that although these schemes can be helpful for some, it may not be the best solution for others. Check if there are other ways to solve your financial woes before taking out an equity release. Here are some other alternatives:
- Claim any benefits you are entitled to
- Check with your local authority and ask them for financial help
- Keep up to date with any pensions you have
- Use your savings or sell some or all of your investments
- Sell your house and get a smaller, more affordable house
How does an Equity Release Work?
There are numerous types of equity release schemes available. It is up to you and your financial advisor to find out which is the best scheme. One way is to borrow a lump sum secured against your property. Another way is to sell part or your entire home, and then receive a regular monthly income or lump sum, or both. In order to qualify for an equity release, you would need to have fully paid up your mortgage on your property, but people with a small outstanding mortgage might qualify.