For many people, their house is their biggest asset. It is the biggest financial investment that you might make in your whole life, so you obviously want to care for it and protect it as much as you can. This means having renovation work done from time to time and making sure that the house remains in its best possible condition. However, by the time you retire, you will probably be looking for different ways by which you can get funds to maintain a comfortable living. In this day and age, the value of property continues to grow year to year.
One of the best options for older people who require a steady stream of income on a monthly basis is to sign up for an equity release scheme. Many companies that offer such schemes also refer to them as lifetime mortgages. These plans became popular back in the 1980’s, and continued well into the 90’s. Their popularity began to wither in the early 2000’s, and were all but gone by the time the market crashed in 2008. However, these plans have begun to resurface again, and many of the leading banks and credit lending institutions have started offering them to customers again. You have probably invested a great deal of time and your money in your house. When you grow old, it is time that it starts paying you back!
How Does It Work?
Lifetime mortgage plans are not just restricted to houses; any expensive product that has capital value can be used for the scheme. Basically, the scheme allows you to retain ownership of your property, while also getting a steady income on a regularly basis. Now, for some, it might sound too good to be true, but there is a small “catch” involved.
Basically, the amount that you are paid throughout the tenure must be repaid at a later stage. If common convention is followed, then the amount will be repaid when a person dies, so you don’t have to worry about any liability on your head for as long as you are alive. Now, this plan is perfect for those who have grown old and don’t have any plans to leave a large estate for their heirs upon their demise.
Naturally, the lifetime mortgage plan offers plenty of benefits that you can’t get from other financial options of a similar nature. First of all, it helps bring predictability to your life, especially as you grow old, thus ensuring that you live a comfortable life. It also reduces the amount of inheritance tax associated with your estate, and in case the interest rates take a dip, borrowers have the option to refinance the mortgage at a much lower cost to other providers, thus freeing up even more money. Perhaps the biggest advantage is that you get to retain ownership of your house, stay there for as long as you are alive, and not even have to make any payments during your lifetime!