Retirement Savings in Drawdown? Think About Equity Release [part2]




What are the different options? 
There are further options available to any potential applicant when considering equity release schemes. They can now pay the interest on a monthly basis, therefore keeping the size of the equity release loan fixed. This example is a fixed interest only lifetime mortgage, and a great way of keeping the size of debt under control.

These plans have been given much thought as there is also the flexibility to select how much of the interest you wish to pay. Therefore, you can work within your own budget.

Another option for those looking to supplement their savings or pensions is the ability to release the equity release funds slowly; with the tax free cash being withdrawn in smaller increments as a wage would. This means that an additional amount of funds can be made available on a monthly basis, making it easy to supplement pensions or savings and not have to return to work or sell the home entirely.

If you prefer flexibility of when & how much you withdraw then a drawdown equity release plan can be considered. After taking an initial tranche of cash from a facility created by the loan provider, you then can draw ad-hoc payments from thus reserve whenever required. Therefore, if a new car, boiler or holiday requires payment the funds are accessible within a 1-2 week window.

In both of these examples, the value of the home equity release loan can be repaid if the home is sold; either if downsizing, or if the policy holders move into care. Alternatively, when the inheritance estate is dispersed, the equity release loan will be a part of the liability on the value of the house.

How is ta lime mortgage repaid? 
Once the residence is sold, then the equity release plan is repaid. Alternatively, if a member of the family wishes to retain ownership of the property, maybe for letting or investment purposes, they will pay back the equity release loan - possibly through a residential or buy-to-let mortgage arrangement.

However, what is important is that there are options for those struggling financially in their retirement, when sitting on a large family home. Often people feel that financing the home might be shifting a debt to the next generation, but it is associated with a property asset - and therefore passes on the option of keeping the family home, or selling it at a later time. Hopefully, once property values do start to rise it may have better market values than during the current recession.

In summary, the options that lifetime mortgages present can be very helpful to those who need some extra money. They can be helpful in their timeliness, they are available and can be completed in a relatively short period of time (compared to that of selling a home). They include features which are likely to be agreeable and attractive to the over 55's who are looking for this support as well.

Mark Greggs is the founder of Equity Release Supermarket who were recently accredited 'Best Financial Advisers' at the Equity Release Awards 2008.
Mark is an experienced Independent Financial Adviser who has now been providing quality equity release advice for the past 12 years. 
Gained with this experience is exclusivity to deals with some of the UK's leading financial providers. 
Mark aims to pass on his experience in assisting the over 55's decide whether equity release is the right choice for them.
For further information or to compare equity release deals available go to: -

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