It is not easy deciding whether or not to take out equity release loans. On the one hand, you want to get an amount you need for a specific transaction, and it is your only source. On the other hand, you don’t wish to diminish the value of the property when it is time to sell it. If you have nothing else to leave your family, you want them to enjoy the full value of the house.
The advantages
When you choose equity release loans, you can borrow money, and remain in your house until you die, without the need to pay rent. You can use the money to pay off all other loans, so you won’t leave anything for your family members to think about. You can also spend the money on home improvements so that even if the lender takes a portion of the property’s value, the remaining amount will still be high. Home improvements increase the value of the property.
The downsides
Equity release has high-interest rates. Even if you only borrow a small amount now, after 15 or 30 years, and you are still alive, this amount could double. After selling the property, there is almost nothing left to your estate. The good thing is that usually, there is a “no negative” rule which means that even if the property did not sell for the total amount that you borrowed from the lender, your estate would not have to pay anything.
Don’t decide alone
It helps if you seek help from equity release advisers. They know a lot about equity release. They can tell you what to do. They will present you with the advantages and disadvantages of choosing this type of loan. You also have the choice between a lifetime mortgage and home reversion. Both have different terms that are quite difficult to understand. The advisers will tell you the difference, so you will know which of them would be suitable for you.
As advisers, they have years of experience. They can also point you to some of the best equity release providers, but not tell you which one to choose.
You need to prepare well
Like any other loans, you also need to apply first before you get approval. There is also a possibility that your application will end in rejection. With the help of expert consultants, you will be ready to face the daunting application process. You will go prepared to the equity loan provider’s office and get the amount you need in no time. Your chances of rejection will decrease when you have all the documents required for the application, and you fully understand the terms.
After consultation, take time to think about the information you received. You can ask your consultant again if there are concepts you don’t understand. When you are ready, you can start the application process. Don’t hurry when deciding since it can affect you and your children.
Image: Pixabay.com
