What Do Guaranteed Voluntary Repayments Mean for Equity Release?
You may use equity release to unlock the worth of your home and receive cash in a lump payment. Depending on your property and the sort of loan you want, there are many forms of equity release and various options available.
A voluntary lifetime mortgage plan may be ideal for you if you want to release some equity from your house while maintaining total control over your finances.
In this article, equity release adviser Aaron Page explains what equity release is, equity release pitfalls to look out for, and answers the question of what guaranteed voluntary repayments mean for equity release.
What’s Equity Release?
Equity release refers to various solutions that allow you to access the equity (cash) locked up in your property if you’re elderly.
You can take the money as a flat sum, in smaller payments, or both.
What’s a Voluntary Repayment Plan?
A voluntary repayment lifetime mortgage plan is a variant on current lump sum and drawdown plans that allows you to return up to 10% of the loan amount each year without penalty.
By making payments toward the balance, homeowners may reduce the interest accumulated on the plan.
Am I Protected When Using Equity Release?
Yes, while releasing equity from your property, rest confident that The Equity Release Council was established to safeguard individuals from falling victim to fraudulent scams.
They must also guarantee that you’ll never owe them more than the total sale price of your house, even if the value decreases.
You also have the opportunity to have a solicitor review all paperwork before enrolling in a plan.
What Are the Risks and Pitfalls of Equity Release?
The primary pitfall of equity release is that it doesn’t compensate you for the total market worth of your house.
You’ll receive significantly less money than if you sold the house on the open market – but you would still have to find another somewhere to live in that case.
Another disadvantage of equity release is that it reduces the amount of inheritance your beneficiaries may get otherwise.
Am I Eligible for a Voluntary Repayment Plan?
To be eligible, you must be at least 55 years old and own a property worth more than £75,000, as with previous programs.
Beyond that, the amount you can borrow is determined by your age and the property’s value and is computed on a sliding scale. We’re always delighted to offer a thorough illustration depending on your circumstances – please request a call back if you’d like us to contact you with precise data.
How Much Can I Borrow?
The magnitude of the lump sum payout available when releasing equity from a second house may differ slightly from that of a primary dwelling.
The precise amounts depend on your age and the property value, and the perceived risk of a lifetime mortgage firm financing against a second home.
The voluntary payback plan might be helpful if you want to achieve financial independence while still owning 100% of your asset.
It’s time to relax and enjoy your well-deserved retirement, and equity release allows you to do this.