Archive for February, 2010
Making financial sense of your equity release plan
An equity release simply refers to a way through which your home value becomes the source of a lump sum or even income while you are still the one who is living in it. Today, these plans have become very common. In case you have been living in your home for a very long time, it must have appreciated in value. This is the reason why you would want to get some income out of this appreciation. This is why many older people feel richer today than they used to feel when the relocated to their new home for the firs time.
The difficulty arises since such people are well off theoretically but practically, they might still be struggling to put a meal on the table. In order to solve this problem, this is where equity release plans come in. They enable you get the good things of life while you are old and retired. For many people, this is all they need in order to be happy.
Some of the things that you can do with this home equity release money include improving your home, repairing it, paying medical bills, buying gifts and taking your orphaned grandchildren to school. At some other times, the money could merely be a form of monthly income for sustenance.
Equity release can be acquired in two different ways. One of them is lifetime mortgage. The other is home reversion. Both of these methods can provide you with a regular income source or a lump some. Your financial advisor is the one who should advise you on the option that is best for your circumstances. The choice here depends on your age, your wishes, your circumstances and urgency with which you need the money.
Another thing that you need to know is that these financial solutions have advantages and disadvantages. Before you get into an equity release plan, make sure that you understand the financial implication of the decision on you as well as your relatives. With proper understanding of these financial solutions, you will be able to plan for the money in a more sober manner. This is the only way through which you can come out of financial hardships in old age.
It is important to try to demystify the complications that many people perceive when it comes to equity release plans. Most of these equity release plan complications result from fear of the unknown rather than from an objective analysis of ones true financial circumstances or impending risks.