­De-busting 5 Common Equity Release Myths

Equity release, if described naturally, is getting the lifetime mortgage on your house. By doing so, you receive the lump sum cash amount equal to your house value. This insures a steady stream of income. It must be, however, keep in mind that the income provider must be later repaid that amount. Applied to people over the age of 55, equity release is now UK’s fastest growing financial service. All equity release providers are now regulated by the Financial Conduct Authority (FCA) thereby ensuring consumer protection. Additionally, there is an Equity Release Council (ERC) which provides equity release specialists and advisors.

It is a potentially valuable later life service but has a lot of myths attached to it. So, what are those myths that have been false but you had believed them till now? We are going to de-bust five of the major myths attached to equity release to help you make better decisions.

1.   You No Longer Are The Owner Of Your House

There is no truth to this myth. Lifetime mortgage on your house does not nullify the ownership of your property. You and your partner will continue to owe that residence until your lifetime or until you turn to the long-term care plan.

2.   Equity Release Makes You Owe More Than Your Home Value

The equity release council guarantees no negative equity. This means that you will never have to owe more than the value of your house to your service provider.

3.   Your Heirs Don’t Get Their Share Of Inheritance 

The property is sold once you stop living in it. The money obtained from it is used to pay off the loan, and the remaining share is handed over to a person’s heirs. The catch here is that, if the property decreases in amount, the remaining loan is written off and the heirs don’t have to pay it.

4.   Monthly Repayments

There is no monthly repayment obligation. There are a fixed interest rate and a monthly repayment plan attached to any other mortgage, but lifetime mortgage lets you set up a 10% repayment balance per year. It comes with two additional perks: the equity release repayment is penalty free and voluntary.

5.   You Can’t Avail Equity Release If You Have a Pre-existing Mortgage

A pre-existing mortgage can’t limit you to avail equity release. The reality is that the most popular use of this includes paying off any pre-existing mortgage and then spending the rest as desired.

Moreover, it does not limit you to that same property. As long as your plan meets up certain criteria, you can change your residence and take your plan along. With all your doubts covered and such baseless myths covered, we believe that you are now not only more aware but better informed as well. To know about other details about equity release, read more at: LondonEquityRelease.net. You can now head straight up to your consultant without the fear of losing your house, money or both.