Equity release is not as complicated as many people think. Simply put, it is the releasing of money (equity) that is currently locked up in an asset. An example, probably the most commonly used example, would be someone releasing some of the value tied up in their property.
If you own a property that is worth £120,000 and have an outstanding mortgage of just £60,000 you have £60,000 worth of equity that could potentially be released. In theory, this means that you could receive a cheque for £60,000 and spend it as you wish. However, most equity release schemes work slightly differently than this. Normally they give you a small amount as a lump sum plus a regular income either for life or for a specified time period.
Who is Equity Release For?
A common misconception in the UK is that you have to be a pensioner or retired to benefit from equity release. This is not the case, in fact, most providers will allow any homeowners aged over 55 with sufficient equity in their property to release at least some of their equity.
Equity release is designed for those people whose current income is not adequate for them to live comfortably. It is also beneficial for people who owe large sums of money and are paying out a lot of interest. Even if you do not have large debts or need to increase your income equity release may still be of benefit to you. This is because you can use the money from releasing equity in your home to do some of the things you have always wanted to. However, it is not a financial move that should be taken lightly and is something that you need to research thoroughly before embarking upon.
Researching Equity Release
The best way to research equity release is to speak to friends and family who have already done it, and read up about it on the web. Should you decide that equity release is for you shop around by using an equity release comparison service, there are several available on-line.
Age partnership is a great equity release comparison site. There you can compare schemes from many of the UK’s largest providers and receive a quote for the best scheme currently available.