Increasing Numbers of UK Retirees Are Using Equity Release to Repay Interest Only Mortgages
The number of equity release plans has soared in the last few years. Recent reports now suggest one of the key reasons why retired people in the UK are opting for these plans is in a bid to pay of maturing interest-online mortgages.
A leading firm which specialises in retirement planning explained that there has been a surge in lump-sum equity release plans being taken out in the last year.
The company says that people are looking for a way to repay money they owe to their mortgage lender and are using the lump sum to pay off shortfalls in interest-only mortgages.
Citizens Advice has recently warned that as many as 1million people in the UK didn't have a strategy in place for repaying their interest-only mortgage and could face repossession as a consequence.
The record number of equity release plans being taken out underlines the importance of property wealth as part of retirement planning. As the first wave of interest-only mortgages mature customers are turning to equity release to plug the gap.
Why Choose Equity Release?
Equity Release is available for those over the age of 55. It allows you to release the money tied up in your home to enjoy in retirement. As with all financial products you should seek equity release advice to ensure you are making the best decision for your circumstances.
There are two equity release options you can choose from:
1. A lifetime mortgage where you take out a mortgage secured on your home (provided it is your main residence). You retain ownership and can keep some of the value of your home as inheritance for your beneficiaries. You can either make repayments or can let the interest accumulate. The loan and any interest is paid back why you pass away or move into permanent care.
2. Home reversion is where you sell part or the entirety of your home to a provider in exchange for regular payments of a lump sum. You can continue living in the property until you pass away. You can ring fence a percentage of your home for your inheritance. At the end of the plan your property is sold and the money made in the sale is shared among the remaining owners in their respective proportions.
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