Archive for the ‘Mortgage’ Category

Life Equity Release – the preferred way of mortgage

Thursday, June 6th, 2013

mortgageThe process of life equity release is a smart way to enjoy life post retirement for cash-short but house-rich people. Equity release (as life equity release is commonly known as) is much like usual mortgage loans where you will get loans against the home & have the liberty to get back the home after repayment anytime. But the main difference between equity release and general mortgage is that in the former case you might not chose to repay your loan ever. Your property will stay under your ownership till your last day and would only go to your beneficiary when you leave for your heavenly abode. There are various equity release schemes today of which the most popular is lifetime mortgage.

Lifetime home mortgage would allow you to relish tax relieved lump sum payment at fixed rate of interest that would be paid monthly or annually. There are two major forms of lifetime mortgages namely standard and drawdown. In case of the standard option you would be getting tax-free lumpsum cash for your considerable expenses like funding college fees for your grandchild or to repay the accumulated debts. When it comes to the drawdown scheme, there is no lumpsum cash upfront and here you can take the mortgage loan in stages. The standard option is always more expensive than the drawdown option.

However, in both the cases you will have 100 percent property ownership and the repayment is made only when the property will be sold, when the owner enters long-term senior care or dies. The lifetime mortgage scheme is available to people within 55 to 95 years of age in UK. The loan amount depends on your property value and you would benefit from any enhancement in the property value over the years. Besides, lifetime mortgage schemes come with partial inheritance-protection guarantee on a part of the property.