Getting a nice lump some of capital, or steady income of a period of time, is possible through equity releases. While mostly for the elderly or ill, these types of loans are given most commonly in exchange for rights to a piece of property or home. It isn't without its drawbacks, however, and isn't a decision that is to be made lightly.
Equity releases are usually paid back upon one's death, as they are tied to the property of the one applying. Once the applicant has left behind his or her assets, the business who offered the equity release will then take control of the property or other objects in payment for the initial lump sum or periodic payments. This has several definite benefits and drawbacks for the applicant.
The first benefit of an equity release is that it reduces the inheritance tax that one's descendants would otherwise have to pay. Less value in inheritance means less tax, so there is less to worry about as a result. Often times the lump sum given to the borrower is also passed down to descendants, who are more than happy to use the funds for funeral costs or other related fees. Different terms and benefits are available with different lenders.
Things aren't always on the plus side with an equity release, however. Descendants and relatives who succeed the applicant will inherit less capital or assets as a result. In the same sense, any charities that were to receive money according to a legal will also suffers the same fate. This makes the debate of whether or not to opt for an equity release quite tough, and one which should be discussed with family members before making a decision.
There are several different flavors of equity releases to keep in mind. The lifetime mortgage, for instance, is one of the most common. It allows for a loan to be secured against the borrower's home, which is then repaid upon death as the lender resells the property to recover lost capital. This method also allows for borrowers to keep the house ownership until death.
Other flavors of equity releases may include the home reversion, in which up to 100% of the property is sold to a third party. In this case, the borrower can still live in the home but has sold rights to another person or business. In return, the borrower receives regular income or a large lump sum in compensation for the exchange in ownership rights.
In Conclusion
Equity releases are great ways to enjoy the finer days in life. To see if you apply for an equity release, consider visiting several online and local lenders for more information. There are many different packages and plans to opt for, even if one isn't elderly or ill in some shape or form. - 15266
Equity releases are usually paid back upon one's death, as they are tied to the property of the one applying. Once the applicant has left behind his or her assets, the business who offered the equity release will then take control of the property or other objects in payment for the initial lump sum or periodic payments. This has several definite benefits and drawbacks for the applicant.
The first benefit of an equity release is that it reduces the inheritance tax that one's descendants would otherwise have to pay. Less value in inheritance means less tax, so there is less to worry about as a result. Often times the lump sum given to the borrower is also passed down to descendants, who are more than happy to use the funds for funeral costs or other related fees. Different terms and benefits are available with different lenders.
Things aren't always on the plus side with an equity release, however. Descendants and relatives who succeed the applicant will inherit less capital or assets as a result. In the same sense, any charities that were to receive money according to a legal will also suffers the same fate. This makes the debate of whether or not to opt for an equity release quite tough, and one which should be discussed with family members before making a decision.
There are several different flavors of equity releases to keep in mind. The lifetime mortgage, for instance, is one of the most common. It allows for a loan to be secured against the borrower's home, which is then repaid upon death as the lender resells the property to recover lost capital. This method also allows for borrowers to keep the house ownership until death.
Other flavors of equity releases may include the home reversion, in which up to 100% of the property is sold to a third party. In this case, the borrower can still live in the home but has sold rights to another person or business. In return, the borrower receives regular income or a large lump sum in compensation for the exchange in ownership rights.
In Conclusion
Equity releases are great ways to enjoy the finer days in life. To see if you apply for an equity release, consider visiting several online and local lenders for more information. There are many different packages and plans to opt for, even if one isn't elderly or ill in some shape or form. - 15266
