Equity release schemes are wonderful schemes for the elderly people who are planning to utilize their idle equities to make up for their low incomes. These schemes can be utilized for a variety of reasons such as for purchasing a new home, for holidaying purposes and for meeting any personal commitment.
With the property prices escalating like anything, many elderly people are willing to augment their meager monthly income by releasing some part of their equities in their homes. The equity release schemes often provides much needed security to the lives of the aged people.
A wide variety of equity release schemes are available at the market place. In fact, no particular equity release program can be dubbed as the best and most suitable for everyone. Here we discuss about the different equity release programs available at the market place.
Lifetime mortgages
Lifetime mortgages are regarded as the most popular type of equity release program. This type of equity release loan is secured against the value of your house and moreover this type of equity release scheme is exchanged for a tax free lump sum. The rate of interest associated with these loans are fixed in nature. The lifetime mortgage loans are not repaid on a monthly basis but these are added to the mortgages.
Drawdown lifetime mortgages
Drawdown lifetime mortgages are special type of lifetime mortgages with some additional advantages. This scheme offers you with a cash reserve facility. This gives you the chance to withdraw any amount initially while the remaining amount is kept for future withdrawal. Interest rate is charged only on the amount that you withdraw.
Interest only lifetime mortgages
An interest only lifetime mortgage is gaining in popularity as it is offering the elderly persons with good surplus incomes. These schemes work by repaying the interest charged on the mortgages and thus maintaining a level balance over the whole term.
Home income plans
A home income plan is an important type of equity release scheme. This scheme combines the features of a lifetime mortgage and a home reversion plans. Initially an equity release program offers capital which is then invested into an equity to provide a monthly income. Anyways, attraction of home income plans has declined in recent times.
Home reversion plans
This particular scheme allows you to sell a part of the value of the property to the reversion company in exchange for a tax free lump sum cash. This helps you obtain a guaranteed lifetime lease which enables you to live rent free in the property for the rest of your life. At the final stage of the term, the property will be old and the sales proceeds will be distributed accordingly.
Interest only mortgages
Interest only mortgages have also become very popular. This type of mortgages require you to pay only the interest on a monthly basis. This also includes payment into investment vehicle such as an ISA, endowment, or pension. The underlying idea is that the investment plan would perform over the mortgage term and will repay the balance at the end.