It is common for homeowners aged 55+ to use equity release as a way to improve their financial situation and it can certainly be a good option. Equity release involves unlocking the value of your home that you don’t pay any mortgage on which could then be used for any reason whether this is improving the home, going traveling, or simply improving your financial health.
Remortgaging to Release Equity
The most common form of equity release is a mortgage that is not paid off until you die, but of course this does mean that there will be less for loved ones to inherit (unless the cash is used to increase the value of the property). Homeowners often borrow against their equity by remortgaging to get a cash lump sum which is known as remortgaging to release equity, which you can do either by speaking to your current mortgage provider or remortgaging with a new lender.
How Much Equity to Release?
If you decide that equity release is the best option for your circumstances then you will want to know how much equity you can and should release. The quickest and easiest way to do this is with an equity release calculator, which simply involves entering basic details such as your property value and age for instant results. Keep in mind that there will be various other fees that you will need to cover in addition to the cost of interest, so it is always important to take your time with the decision.
You will need to weigh up the cost of remortgaging against the value of your equity, which will involve working out what the current value of the property is and how much mortgage you still owe. You need to consider much your home has increased in value, but keep in mind that there is no guarantee that property prices will continue to rise in the future. Obviously, you also need to make sure that you can take on the additional monthly outgoings without it making it too difficult to manage.
As you can see, there is a lot to think about when it comes to equity release and it is not always the best option for homeowners. The best step to take is to speak to an independent mortgage broker or a financial advisor with an equity release qualification and they will be able to offer expert advice, answer any questions that you have, and find the best deal.
Equity release can be a smart move for many homeowners and the best way to improve your financial situation, but there are also risks and many considerations to take on board so it needs to be a decision that is carefully thought through and you should always consider your alternators and seek expert advice.
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