When it comes to debt and debt-related problems, there are a lot of scary-sounding technical words being thrown about by everyone from your creditors to your debt collectors.All this jargon can be very confusing, and can make you want to simply ignore your debts until they go away. Sadly this never happens, so it’s very important that you understand your debts and the options that are open to you. One of the terms may you have heard with regards to your debt is “equity release” – what is equity and how do you release it from your property? How do you know if it’s the right option for you?
The word “equity” simply means “value” and an equity release is a means of cashing in on the “equity” of your property while retaining use of the object. You’ll get money either in the form of a lump sum or a steady stream of income, usually using the value of your house. Obviously nobody is going to simply give you money because you have a house – the catch, as it were, is that the income provider must be repaid at a later stage, usually when you pass away.
So the first question you’ll be asking yourself is “am I eligible?” In most cases, as long as you are at least 55 years of age and own your own home, you’ll be eligible for an equity release. If you’re entering into a joint application, both applicants should be 55 years or older. The value of your property will also affect your eligibility for an equity release, and affect the amount your lender is willing to offer. Ownership status, property type and even construction quality are all factors which will influence your eligibility, so it’s worth getting in contact with debt advisors from Trust Deed Scotland® today to talk about your options and eligibility when it comes to equity release.
If you think that you may be eligible for an equity release and that releasing equity from your property may be the best way to deal with your debts, it’s highly recommended that your next step is to seek expert advice from a well renowned company such as Trust Deed Scotland®. Equity release is not suitable as short-term loan – it’s a long-term commitment which needs to be carefully considered before any paperwork begins. Equity release plans are generally designed to be paid back only when you die or move permanently into care – if your partner isn’t on the equity release and they outlive you, they could be forced to move house. Our expert advisors at Trust Deed Scotland® will be able to talk you through your concerns and help you decide whether or not an equity release is for you.
There are several risk factors which you should consider when deciding whether or not you should try to release equity from your property. Releasing equity will reduce the value of the property in question, and may affect your entitlement to state benefits. If you opt for a home reversion plan with your equity release, the company providing the plan will acquire the deeds to the property. If your home increases in value from here, you will only benefit from the increase in the proportion of the property you still hold. Similarly, any decreases in value will be shared by both you and the loan equity provider. Once you’ve taken out the equity release, if you decide to downsize to a smaller property, you may be required to repay the equity, either in part or in full.
The final consideration is what happens when you (and your partner in a joint application) pass away. The property you released equity from will be sold by the equity provider, and the equity (plus any interest) will be paid off. Any extra money from the sale will go towards inheritance as normal. If you’re looking to leave your house to your children as a place of residence, then the chances are that an equity release is not for you.
These are some of the considerations which you should bear in mind when deciding whether or not you’re considering an equity release on your property. If you have any questions about equity releases, or any other debt solutions in Scotland, call Trust Deed Scotland® today. Our expert advisors will be able to help you choose the right debt relief solutions for you.