A recent report from the Pensions Policy Institute named “Retirement income and assets: outlook for the future”, has highlighted that future pensioners will have to think outside the box in order to secure a healthy income in retirement. The report suggests that people will have to look to a greater variety of assets, including home equity in order to support their retirement.

Equity release options
The two types of equity release plan currently available are the lifetime mortgage, which counts for approximately 95% of the Equity Release Schemes market, and the home reversion plan, which makes up the rest. The Lifetime Mortgage behaves just like a standard mortgage, allowing you to borrow against the equity in your house. Interest is charged, which can be paid on a monthly basis or, more commonly, deferred until death, repayment or you move into a nursing home.

The amount you can release from your home will depend on certain factors, like your age, health and the value of your property. There is normally a minimum release amount of £10,000.

You don’t actually have to release all the equity in your home. For example, Aviva has a plan that sets a maximum drawdown amount, and then they permit you to take the rest whenever you please. ‘Interest is only charged when you take the money, which makes this plan increasingly popular,’ says Dominic Fraser-Smith, the ‘at retirement’ manager at Aviva.

The interest you pay is normally at a fixed rate for the entire term, and currently this can vary from 5% to 8%. Having an interest rate of 6% would mean that your debt would double every 11 years or so, while a rate of 7% would cause it to double within 10 yrs. This only goes to illustrate why it is crucially important to use www.Release-My-Equity.co.uk to ensure you get the best possible deal. We will do the leg work for you, and make sure that the advice you are getting is top class.

The other type of plan mentioned above is the Home Reversion, which is available for customers from age 65. This particular type of plan allows you to sell or share your home in exchange for cash. Its gives you the right to live there rent-free for the rest of your life. Of course as before, the amount you receive will depend entirely on your age and sex, and that of your partner, at the time of sale.

If you are interested in Equity Release Advice please visit our main website here. We have a simple, quick and free Equity Release Calculator where you can get an idea of what you could release from your property.

Tags: Aviva, calculator, Drawdown, equity release, Equity Release Schemes, Home Reversion Schemes, Lifetime Mortgages

This entry was posted on Sunday, March 6th, 2011 at 10:59 and is filed under Industry Topics. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.