Inflation is rising, house prices are falling,
unemployment and business failures are on the increase and a combination
of a mortgage shortage, overpriced houses and government dithering have
caused the property market to practically dry up. It is hardly surprising
that repossessions are reaching record levels as homeowners struggle to
make ends meet.
Briefly, the idea behind equity release is that a financial institution, often an insurance company, either buys a house outright or advances a mortgage on it, on the understanding that no mortgage payments will be expected from the owner throughout his or her lifetime. Upon the death of the owner the property would be sold and the lender would recoup it's investment at this stage. Obviously there has to be a time limit on a transaction of this type and so equity release schemes are normally available only to people over the age of 55, and since there will be no repayments made during the life of the scheme interest charges will continue to mount up and could very easily exceed the sum which was originally paid out, several times over. As a result the lender will only pay out a small proportion of the equity in the property, and in practice this seldom exceeds 30% unless the owner has a short life expectancy. Equity release schemes are normally taken up by mature people over the age of 55 who want to release a little extra money, and who are comfortable with the fact that there will be a lot less in their estates for their heirs to inherit.
All information on this site is meant as general information only and is not intended to be seen as advice on any person's financial, investment or tax affairs. You are strongly urged to seek advice from an Independent Financial Advisor for any aspect of your financial affairs that you are not familiar with.
Copyright Gold Blend 2008 All Rights Reserved