You have to think twice before you take equity release. You can get the amount as a lump-sum amount, or ask for small loans over time. Equity release usually comes with a huge interest rate. The good thing is even if you tie up the loan with your property, you can stay in your home until you die. You also need not pay rent. You need to maintain the property though since you are technically still the owner.
If you decide that it is best for you to opt for equity release, you need to be careful of what you will do with the money you borrow. Here is a list of expenses which equity release can typically cover, and which of them would be worth it.
Investment
Some people take out loans so that they can invest the money elsewhere. Borrowing money is a risk, and investing is also a risk. If you are young and you can still see your investment grow, it might be a risk worth taking. However, you are already at a later age in your life. It won’t be worth borrowing money through equity release for a business venture. You are wasting the amount you borrowed.
Home renovation
Now that you have more time to stay in your house as you are no longer working, you can focus on home improvement. Since you can still stay in your house until your death, you can enjoy whatever home changes you decide to make and won’t have to cut costs as much on the renovations. Make sure that you focus on changes that can increase the value of your property. When you die, and it is time to put the property up for sale, the home improvements made could help drastically increase its value. Therefore, it is a worthy investment.
Help your grandchildren
It is unfortunate to see that children today don’t have the same opportunity as the older generation when they were at that age. Even those who have a good job today still have a hard time getting a house. Due to the rising cost of housing, it is close to impossible for a lot of hard-working young professionals to get a house. If you want to help your grandchildren, you can take equity release so that they can have a down payment to finally afford a property.
Allow you to stay in your home
Not all people are lucky enough to grow old and remain healthy. A lot of people over 55 start experiencing severe health conditions. For instance, if you are too old and sick, you might not re-mortgage anymore. You are at risk of having your home repossessed. With equity release, you can pay off the mortgage along with the penalties, and remain in your home. It is a dire situation, and equity release is the only way to survive.
These are just some of the things you can do with your money if you opt to have equity release over 55. You can decide which of them would be worth it and read the terms before signing any document.
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