What To Consider When Selling Your House To Release Equity
There are all kinds of reasons why people choose to sell their house, beyond perhaps the most obvious one that they decide they want to move somewhere else.
Sometimes when the youngsters in the family have flown the nest, their parents decide they want to downsize and retire to somewhere a little smaller. Or they want to move abroad and far away from home where they’ll need the funds to make a whole new life. Some homeowners make the decision to sell quickly to make some money, going for a fast sale with an online estate agent like House Buyer Bureau, perhaps because they have debts to settle or want to release equity.
New Earnings Source
Equity release simply means releasing money from the value of your home, be that in the form of a lump sum or as a new monthly income. This is done by keeping the use of your home but then using its value to generate a new earnings source.
It’s an appealing prospect for anyone looking to increase their income later in life, especially as house prices rise and retirement income falls. If you are asset-rich but lacking in cash then it will be an even more attractive prospective to you as it will involve taking the value of your home, which is of course in almost all cases going to be your highest value asset, and turning it into a new regular income source.
It works by incorporating you into an equity release scheme, in which you borrow money against the value of your home, and that money is then repaid when your house is sold either when you die or move into a care home. These schemes work according to the principle that you’ll be lent part of your home’s value in exchange for a share of its proceeds when that home is subsequently sold.
Explore Your Options
They have a lot of advantages, but as you would perhaps expect equity release schemes are notoriously complicated. Some do not really offer value for money. Indeed many such schemes can come with hidden costs and risks attached to them.
So on the whole if it is an attractive prospect to you, it will pay to get some expert professional finance advice on the subject. You should also explore other options and find out how this would affect your entitlement to state benefits. Borrowing the minimum amount you need to or choose a drawdown scheme so that you can retain the option to borrow as and when you need it.
You should also think about whether you want to take a scheme that lets you make interest payments every month if you can afford them, or whether to go for a scheme with no early repayment charges. Ultimately, you have to explore all the options available and make the decision that’s right for you.
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