Before you choose any particular scheme for equity release on the property you own, it is necessary to evaluate whether this is the appropriate financial solution for you. It is essential to seek financial advice before you decide whether to opt for releasing the equity on your property and avail of cash benefits from it.
Here are the factors you need to focus on to understand whether equity release schemes are right for you.
Consider your life expectancy. If you are aged between 55 and 65, the schemes could prove to be advantageous for you. Monthly cash payments could ensure a comfortable retired life for the elderly individuals participating in these schemes. However, if you are above 75 years of age, a lump sum instead of monthly payments may be a better option.
Consider your present and future circumstances. If you need to move to an assisted living facility or a care home in future, it is necessary that the scheme allows this. Most schemes provide you the option to move to a new home, nearer to your family, if the property corresponds to the criteria set by the scheme provider.
Consider your estate and inheritance. If you opt for this scheme, and release the value of your property in equity, it would affect the estate and inheritance you leave behind for your beneficiaries. It is, therefore, a good idea to talk to your beneficiaries before you choose any scheme. You also need to talk to your solicitor to understand these implications.
Consider your spouse or partner’s living conditions. If you live with your younger spouse or partner in the property you use for equity release, they may have to arrange for separate accommodation after your death. However, if both of you participate in this scheme, they may continue to live in the property even after your death.
Consider your other benefits. If you are eligible for other retirement benefits, it is necessary to find out whether these would be affected by this scheme. Opting for equity release on your property may affect this eligibility. Get in touch with a financial advisor to understand the implications of this scheme on any other benefits you are eligible for.
Equity release plans may be of considerable help if you are in need of cash. However, it is necessary to analyse the circumstances, understand the consequences and the other financial solutions you may avail of instead. It is better to consider your alternatives, if you have any, before you opt for this plan.
If you think that these plans are appropriate for you, the next task is to find out about the eligibility criteria from the equity release providers. You may be eligible for most of these schemes if you are:
- Aged between 55 and 95 years
- Own the property
- Value of the property you own is more than £35,000- £40,000
- No current mortgage is on the property
- Your property is of standard construction
It is necessary to find out the details of the eligibility criteria of a particular scheme before you apply for it.
Sophia Webb is a financial advisor. She provides tips and suggestions for elderly individuals trying to understand whether equity release schemes are suitable for them.