Others entered the property market later in life and found that, with retirement looming, they faced the prospect of substantial mortgage repayments every month for years to come. At a time when people are looking towards retirement, the last thing they need is a major drain on their income. That is why many homeowners, faced with the prospect of continuing mortgage payments well into their retirement, are now turning to equity release schemes to help them to pay off their mortgages.
What are Equity Release Schemes?
In simple terms, an equity release scheme is an arrangement where a home owner/occupier aged 55 or over can release an amount of equity in the property. The amount that is released is free of tax and can be used for whatever the homeowner wants, including paying off the balance of any outstanding mortgage. The equity release loan is usually only paid back if the house is sold or when the home owner(s) die and there are normally no regular monthly repayments. Instead, the interest accumulates and is added to the loan until it is paid off. When you are about to become reliant on a pension, rather than a full-time income, a simple pension forecast will demonstrate the immediate impact of retirement on your finances and, inevitably, the vast majority will be worse off.
That is why equity release is seen as an ideal solution for anyone taking a drop in income following retirement. In capital terms, if the equity released is used to pay off an existing mortgage, the effect is neutral. The only difference is that, rather than paying the interest every month it is rolled up and added to the loan. The removal of the mortgage payments can minimise the effects of any reduction in income and enable a retirement without financial worries.
In many cases, an extra amount, over and above the sum needed to pay off the mortgage, can be released and spent on clearing other debts, funding a much needed holiday, buying a new car, making home improvements or to help the children get onto the housing ladder themselves.
How to Find Out More
There are many Equity Release providers in the UK and so you may wish to make enquires with a company that looks at the whole of the market and will find a plan that best suits your circumstances. We have teamed with independent specialists, Equity Release Supermarket who have professionally qualified advisers all around the country and will be happy to help over the phone or in person.
It can seem quite daunting so to start with why not use our equity release loan calculator to see how much you could borrow.
Then, if you are interested in proceeding the advisers at Age Partnership will answer all of your questions and take care of all the formalities, pay off your mortgage and begin to enjoy your retirement without the monthly responsibility of those expensive mortgage repayments.