Older people looking for a way to make some extra money to handle some projects, such as a home renovation or even a small vacation have the opportunity to gain money by offering up the value of their house, known as equity, for cash. This equity is the value of your home without any mortgage loans or any other type of loan. The value of your house is determined by how intact it is. Over time, you may have spent so much money renovating and improving your house, increasing the value of your home.
Equity Release Calculator refers to the process of getting some part of the equity of your home. This equity is converted to cash and paid to you once. The good thing about this money is that you do not have to pay it back plus you get to stay in the house. The money is also tax-free. Equity release has always been around but has only enjoyed new interest due to the increasing cost of living and increased wants.
This is when you take a loan based on a percentage of the equity of your home. This Equity Release Mortgage could either be taken once or paid in installments. Although the loan is repayable, it only comes into effect when you die. The loan garners interest over the months.
A lump-sum payment is payable at once and this is best for those seeking to offset some debt or who need the money for a project. The loan given begins to acquire interest from the very moment it is released.
Another means is to opt for the drawdown plan, which allows the loan to be paid into you monthly or at any time you need. The money is released in batches based on your design or need. The interest is only given on the loans taken and they tend to be smaller when compared to the lump sum payment. This option is good for those who need more money to support their retirement plan.
Home Reversion Schemes
Under this scheme, you sell your house to a company for money that is within the market value of the house. You may choose to sell the whole house or a part of it. Apart from the money given, you also get the chance to stay in the house for life. Upon your demise, the house is claimed and sold by the company that bought a percentage of it from you and they keep the percentage of the money that you sold out the house for and your estate gets to keep the remainder of the percentage you sold. So if you sold 40% of your house, your estate is entitled to 60% of the money the house is sold for.
Like the lifetime mortgage scheme, the money paid could either be once or in installments.
Elderly homeowners who are 55 and above are eligible for the lifetime mortgage scheme while those who are 60 and above are eligible for the home reversion scheme.
How do you know how much you are entitled to?
Usually, the company calculates how much equity your house is worth, but you can use an equity release calculator to get an estimate of the money you may be getting.
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