Property Rescue Blog

Equity Release and Debt Consolidation

Equity release schemes are usually targeted at the elderly, as a way of generating capital from their property, whilst being able to continue to live in their home.

There are a number of different ways of releasing equity on your home, but the most popular are either a longer term mortgage or a home reversion. A home reversion is where the homeowner sells all or part of their property to a reversion company and gets either an annual return or cash lump sum.

A home reversion can be a used to relieve debt. It provides the homeowner with instant capital which can be used to cover repayments. The downside is that once the capital has covered the debt, the homeowner is often left in a precarious financial position with no equity left in a home they only part own. Re-mortgaging, although a popular choice, often adds to financial distress. In many cases repayments on a secondary loan, when coupled with the payments on the initial loan actually increase the debt.

Current equity release schemes are targeted at the elderly for a reason. Most schemes require the lender to re –pay the loan on death. In a lot of cases, this reduces the estate of their heirs and helps keep inheritance tax down. They are not designed for debt consolidation per se but more to allow pensioners the luxury of benefiting from capital that is tied up in their home without having to move house.

Sell and rent back has emerged due to the increasing need for people to release capital from their homes before retirement age. The unfortunate reality is that for many, this is to deal with financial difficulties. The main advantages of sell and rent back are the expedience of the sale and the ability for the client to stay in their own home and if required, buy back their property once their financial problems have been sorted. The main issue of course is the fact that there is a big discount on the expected market value. But once this is offset by the money saved in interest repayments the discount may not be such a hefty deficit.

13 February 2008. Equity release,Debt | Comments (0) -

Worried About Your Pension?

The UK is a nation that is getting older by the day! If that sounds like an obvious statement, take a moment to think about the impact that will have: more people taking retirement benefits, less people working to support the economy, and the average life-span increasing through better healthcare.

You don’t have to be an economist to work out that the balance will sooner or later tip with the result that pensions and other state benefits in retirement are likely to decrease.

Personal pensions are a matter of concern to the government who tell us we are not saving enough, nor are we starting to save early enough. There is even talk of future generations starting a pension fund for their children before they reach school age! The immediate problem, however, is that pensions can seldom be topped up sufficiently to make up for a lack of savings in our earlier working lives. So if we are middle aged before we get round to thinking about putting money away for our retirement, we are likely to end up with a pension pot that is woefully inadequate for our needs.

The fact that people generally enjoy longer lives and better health than in previous generations means expectations are higher, with those in their seventies, eighties or beyond finding that they are fit and well enough to travel the world or take part in sports and leisure activities – all of which cost money.

If your pension pot is sadly lacking but you are nearing retirement, your options may seem limited. Once choice might be to release the equity in your home through Property Rescue's sell and rent back scheme. There are a number of equity release schemes on the market directed at older people, not all of which are recommended by financial advisers, so no matter what course of action you are considering you should always take independent financial advice before you make your decision. It could affect your future as well as the inheritance you may have to leave for your beneficiaries after your death.

Property Rescue make the equity release process simple and straightforward. They explain everything to you in clear detail and take care of the paperwork and legal necessities. They will not force your hand, and if at any time you decide that you don’t want to proceed, you are free to walk away without any obligation. If you are considering equity release as a means of providing the cash you need in retirement, do some research into what’s available, consult an independent professional adviser, and give Property Rescue a call to find out more.

23 November 2007. Equity release | Comments (0) -

Property Rescue Blog

Equity Release and Debt Consolidation

Worried About Your Pension?

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