EasyFinance.com Community

Features that Affect the Comparison between Equity Release Schemes

Posted December 19, 2012 by Sophia Webb to Finance 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

Comparing the equity release schemes can be a confusing and time consuming task for retired individuals. Checking the features, evaluating the advantages, assessing the risks and finding the cost details are difficult without the knowledge and experience of the equity release market. It is always a better idea to seek help from professionals in this regard.

Make sure you get help from an independent financial adviser to online equity release calculator schemes. Independent advisers will offer a comprehensive view of the overall market and compare every scheme for which you are eligible. On the other hand, tied or multi-tied advisers will only compare the schemes available from the companies they work for.  

What features must be considered for an accurate comparison of the equity release schemes? While a proficient adviser will have a clear idea about these, you will also benefit from these details. Here are the features that must be included for an accurate comparison.

Availability of tax-free cash: Some schemes may offer the cash in a lump sum at one time while others may offer the cash in small instalments regularly. You may use the cash for any purpose you want. You need to choose a plan that corresponds to your specific requirements.

Possession and use of the home: If you choose a lifetime mortgage plan, you will own your home throughout your life. If you choose a home reversion plan, you will sell a percentage of your home. However, in both cases, you have the right to live in your house for your entire life.

No necessity to make monthly repayments: This is something that differentiates these schemes from regular mortgages. As you need not make any repayments during your life, you have the freedom to enjoy your retired life. The loan and the interest are recovered from the sale of the house after your decease or your removal to a long term care facility.

Guarantee of no negative equity: The equity release schemes available from financial service providers, who are members of the Safe Home Income Plans (SHIP), must have this guarantee. This ensures that the loan, and the interest on it, does not surpass the amount recovered from the sale of the house.

Availability of the option to move: Some schemes offer the option for homeowners to move to another house. If you may decide to do this, make sure you ask the financial adviser to find plans that offer this benefit. You need to keep in mind that the new house you plan to move into must match the criteria set by the financial service provider.

Numerous schemes for releasing equity from your home have these features. However, you will also need to have a clear idea about the disadvantages of these schemes. For example, opting for such a scheme will reduce the inheritance of your family members.


About Sophia Webb: Sophia Webb is a financial adviser. She provides a brief overview of the key regulatory requirements that the financial advisers need to follow to provide appropriate equity release advice. To know her choice of thoughts you can add her to your G+ circle

Leave a Reply:

Only registered users can post comments.

Find More Products & Services