The Equity Release Mortgage Basics [mortgagerefinance-101.blogspot.com]
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mortgagerefinance-101.blogspot.com Seniors Release Mortgages and Equity Release
With equity release becoming a much more popular and viable option for people approaching retirement age, many over 55s are beginning to look into the ins and outs of an equity release mortgage. An equity release mortgage is relatively easy to get to grips with and any anxiety can be quickly removed by seeking equity release mortgage advice.
An equity release mortgagecomes in one of two forms: a home reversion plan or a lifetime mortgage.
Lifetime Mortgage
This is a very popular type of equity release mortgage.
There are three different types of lifetime mortgage: interest only; cash lump sum and draw down lifetime mortgage.Home Reversion Plan
A home reversion plan allows you to release a percentage of your property's value in cash. This means a lump cash sum could be released and spent on a dream holiday, home improvements or anything else that you have always wanted to do or have but could never afford.
An equity release mortgage could afford you and your family enough cash to really make a difference to your lives. It could allow you to pay off all of your existing debts or just live life a bit more comfortably.
The money that an equity release mortgage releases is tax free and can be spent on absolutely anything.Providing a SHIPÂ equity release mortgage is selected, you will never owe more than your property is worth and will be able to stay in the home for life.
Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks, please ask for a personalised illustration.
Find More The Equity Release Mortgage Basics IssuesQuestion by Jon: UK Pensioner mortgage (equity release) question? This question concerns money borrowed from the Nationwide building society. My parents, who are now 73, took out what they thought was £20 000 in equity release from the value of their house (worth now about £200 000 ) 7 years ago. The amount of money "released" was £20 000 which my parents just pay the interest on each month (interest-only). They also have £15000 in outstanding mortgage which is also interest-only. The mortgage term on this £15000 is in 2011/2012. However they have also discovered that the £20 000 has also got to be paid back by 2012 ! They knew that 2011/2012 was when the £15 000 had to be paid back but were under the impression that the £20 000 did not have to be paid back until their death. Looking on Nationwide's website it says that they do not currently offer lifetime mortgages http://www.nationwide.co.uk/search/DisplayArticle.aspx?article=1035 So this leads me to believe that the £20 000 borrowed was just an "ordinary" interest-only mortgage with a fixed end date. Do you think this is correct ? Best answer for UK Pensioner mortgage (equity release) question?:
Answer by Chandra157
Yes I do, that's the problem with the interest-only mortgages is that your make the interst payments but eventually the balance of the mortgage comes due all at once. My suggestion would be to refinance the property to get into a better situation with a fixed rate. This will pay off the balance all at once and there are 10 year loans available. Now or after the first of the year is a great time because interest rates are dropping significantly at this time.
