With inflation having such a large impact on peoples standard of living later in life, ways of releasing extra money are very slim. One such option is by releasing equity through the family home. There are a number of schemes and companies which will help people do just this. However whilst the option will help the person live more comfortably, there are of course what may be seen as negatives to equity release.
Equity release works in that the value of the home owner’s property is taken and a loan is given on the value of the property, thus helping the home owner achieve a much higher living standard. A combination of weekly payments and a lump sum or one of the two can be used to pay the loan. The company offering the loan will become the owner of the property upon the owner’s death or upon them selling and moving into a retirement home and this is how they reclaim their financial input.
As a lot of people aim to keep their home in the family or leave it to their children, this is where the difficult decision comes in. Family members who may have previously been in line to take ownership of the property must understand the participant’s reasons and the participant must be certain it is the correct option for them. They must also know that the benefits of equity release are clear and a greatly positive effect can be had on their standard of living.
Their family should ultimately understand that it is their home and that the participant will benefit from the equity release option by being able to fulfil any possible things they may still wish to do. They will be able to become comfortable with what lies ahead as the equity release option will drastically increase a person’s standard weekly payments.
Equity release is of course optional and whilst it does have the downside of losing what may have possibly been a family home it allows home owners the option of maintaining a similar standard of living as when they were working and enjoy their latter years in a comfortable financial situation. The finances for holidays and other luxuries will be provided which may not have been allowed by inflation affected pensions.
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