Understand Equity Release with Aspire
Your questions about Equity Release
It doesn’t have to be taken all as a lump sum.
The products have undergone changes throughout time, eliminating the necessity of receiving the funds in a single, lump-sum payment. Nowadays, most providers grant the option of utilizing a drawdown feature. This enables you to withdraw an initial amount at the beginning and have the ability to withdraw additional funds whenever necessary.
This arrangement offers the advantage of solely incurring interest on the withdrawn funds, rather than on the funds stored within the drawdown facility. Consequently, you avoid paying interest on funds intended for future use.
You still own your home
There is a prevalent misunderstanding that obtaining a lifetime mortgage entails giving up ownership of your property. However, the reality is that you will retain full ownership, encompassing 100% of your home. The provider will establish a legal charge on the property, comparable to the process of a standard mortgage you might have had in previous instances.
You can still move home / downsize
The loans can be transferred, allowing you to relocate if you choose, and you can carry the loan to your new primary residence. If you opt to downsize, you might need to repay a portion of the current loan from the proceeds of the sale. This is to ensure that the new loan amount aligns with the lending limits applicable to the smaller property.
The products are flexible
Although it is customary for lifetime mortgages to accumulate interest onto the loan, there are alternatives to “service” the interest. This can be achieved by either making regular monthly payments or by voluntarily making occasional overpayments within predefined yearly limits. These options help mitigate the effects of accruing interest on the loan.
You can use equity release to purchase property
The common belief, shared by both individuals and those in the financial services sector, is that a lifetime mortgage is exclusively applicable to those who already possess a property. However, this is not accurate. A lifetime mortgage can also be utilized to buy a property. Therefore, if you’re searching for your ideal home in your later years, you needn’t feel limited by the funds in your bank account or the proceeds from the sale of your current property.
It is not without risk or negative impact.
While the advantages of equity release are evident, it’s important to acknowledge that it also carries certain risks. Careful thought should be given to your future plans and current circumstances.
If you’re currently receiving state benefits, taking out equity release might impact those benefits.
For individuals who intend to pass down their home as an inheritance, it’s essential to recognize that opting for equity release will decrease the overall value of your property due to the combination of the equity release amount and the accumulated interest over your lifetime.
Early repayment charges are associated with this type of mortgage, and these penalties can be substantial if you choose to pay off the mortgage ahead of schedule.
If you’re contemplating equity release, it’s advisable to seek unbiased guidance from a specialist, such as our own team.
No negative equity guarantee
Negative equity arises when the amount you owe surpasses the value of your property. This situation can arise when you secure a mortgage on your home and the property’s value declines.
Most equity release providers provide a no-negative-equity guarantee. Essentially, this assurance ensures that neither you nor your estate will be obligated to repay an amount greater than the eventual sale price of your property. This guarantee holds as long as the property is sold for a price that can be reasonably considered the best achievable value.
Discover how much you could money you could release with Equity Release
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