For those who are above the age of 55, an equity release loan offers the most simplified means of raising some debt free capital. This is a sensible and secure way to get extra money which can be used to enjoy the fruits of a life well lived and money hard earned. The burden of buying or building a home takes a heavy toll on the financial management and now it is time enjoy the returns without and further worries.
The Financial Conduct Authority (FCA) also regulates the equity release market to ensure that the elderly people get their right due from the homes they own. Depending on the actual value of the home one owns and the kind of equity release plan one opts for the amount can vary. However, the bottom line is that this will provide good money to enjoy the old age for your parents.
There are several wonderful ways to spend the amount received through an equity release loan and seeing how the elderly reap the benefits is a sight worth seeing. Some great ideas include taking a luxury trip which most people often put off in order to cater for pressing current requirements. A cruise is a fascinating way to enjoy quality time either themselves or with other family members. Many elderly people prefer taking family vacations at exotic locations with this money.
Such cash also gives them the freedom to buy gifts for their loved ones, especially grand children without having the burden of repayment subsequently. As grandparents they always want to give fabulous gifts to the young ones they dote. Now they can have free cash to do just that without any strings attached. Even buying a few expensive gifts for themselves, is now guilt free as it is their own hard earned investment that you are now reaping benefits of.
Drawbacks to Financial Products
As always there are going to be drawbacks with any financial product. The drawback with a lifetime mortgage or equity release product is the repayment. While you can give a smile to your elderly relatives as they now have a means of making payments for fun dreams it can also mean a lower inheritance for you, none at all, or a situation of a very large mortgage to pay off when they are ready to move to a retirement community.
The interest adds up on any mortgage, but in this case there are no payments made on the mortgage until the end when the lump sum and all of its interest needs to be paid back. In this situation the estate is often sold to make the payment. This could mean there is no inheritance left for you or nothing for your retirees to live on if they already used all the equity given. A savvy shopper will look for the best deal with a decent percentage payout in which the interest rate is as low as possible.
Age Limits for Loan Types
All lifetime mortgages can be taken at the age of 55; however, many of the interest only lifetime mortgages have a cap of 90 on them. It is also a loan in which you make interest payments so that it does not add up on your principle amount leaving an inheritance behind in most cases. This can be difficult for elderly individuals to take on especially if money is for daily living.
Drawdown mortgages can be the wisest option for equity release because a person is able to take what they need when they need the funds rather than taking a lump sum with interest adding up. The interest still compounds with this loan; however, it is only on the amount used rather than the funds in the account readily accessible for use.
If you have someone of ill health that you would like to give a dream holiday to, but lack the money then an ill health lifetime mortgage could be an alternative. They can use the equity in their home to enjoy the last hurrah and yet it is paid back quickly.
Thus the equity release loan offers a smart alternative to raise cash when one is retired and doesn’t have any other source of assured income. Many elderly feel that is better to take out the equity release and enjoy the later days of their life while they still can rather than sit on a valuable home and continue suffering. Giving elderly people to lead more satisfying times while they can still savour their joys and beauties of life is the most precious gift that one can really think of.