In the current economic situation, many people are struggling to make ends meet. There are a number of reasons for this: high unemployment, low wages, and salaries, and increasing cost of living.
For some, the answer is simply that they have more debt than they can afford to pay off without borrowing more money. Equity release provides an opportunity to clear your debts by using your home as security. If this sounds like you, then read on to learn more about how equity release could help clear your debts!
Equity release, also known as a home reversion plan or lifetime mortgage, is the use of your equity in your property to support you financially during retirement.
The amount that can be released will depend on how much money you need and the value of the house at the time.
This is a type of loan where the borrower uses their property as collateral. This means that they use the value of their home to borrow money, and then pay interest on these loans until the house becomes theirs outright or it’s sold at auction if they default.
The advantage here for borrowers with higher mortgages-to-value ratios is that lenders will often provide equity release in order to help people clear debts more quickly than would otherwise be possible.
And the good news?
Equity release can also be used by those who own homes worth less than what’s owed on them: this enables homeowners to sell up without having to move away from family and friends because there are no mortgage repayments involved!
What Are Some Benefits?
One of the benefits of equity release is that borrowers can live in their own homes, rather than having to move into a more expensive property.
Equity release also provides an opportunity for people who want to leave something behind when they die: instead of selling up and moving away from family if they are struggling financially, it allows them to stay put!
There’s no need for your income or assets to be adversely affected in order for you to qualify – this could be perfect if you have too many mortgage payments but not enough money coming in each month!
And while there will always be some risk involved (because lenders are lending against a person’s home), taking out equity release enables homeowners with many debt payments due monthly still living in their own homes.
When Should You Consider Equity Release?
Equity release loans are not suitable for everyone – it’s important to think about the following before taking out an equity release plan.
Let’s have a closer look:
- Equity release is a long-term option: you will be tied into this debt-repayment strategy, with your property security until the final payment on your personal loan has been made. It might make sense if you’re nearing retirement and don’t want to leave anything behind when you die but need some extra security financially during your golden years.
- You should have an additional income coming in each month or at least other assets available such as savings and investments (as well as any Savings Plans), otherwise, there may not be enough money left over after repayments just because of interest payments involved! If you use equity release, you’ll be borrowing at a lower rate and then paying back the loan over time.
- You should have enough savings to cover any large expenses that might come up in the future – for example, if there’s an emergency or your income fell unexpectedly, equity release can help clear debts more quickly than it would take without this debt-paying strategy but doesn’t give people access to any money upfront; think about whether you need extra funds available now!
As with many financial decisions, it’s important to do thorough research before using equity release as a way of clearing debts – speak with mortgage advisors, financial advisers, solicitors1, and lenders who offer these types of equity release loans first in order to understand every aspect involved. From interest rates on variable or fixed rates to the process involved.
How Can Equity Release Pay Your Debts?
If you want to pay off your debts, then equity release can help.
This is because when you take out a loan using the value of your home as collateral2, it’s possible that this will be enough money for the debt-paying strategy and still allow homeowners to live in their own homes.
Equity release can be a good solution for those who are struggling because the debt-paying strategy does not involve any changes to income or assets.
The amount of equity you need will depend on how much money you want and what your property is worth at the time.
Let me explain,
For example, if you’re looking to borrow £150K with a value of your home being £250k, then this could work out as an option where repayments would be lower than interest rates! If it’s just £30K that people want over 20 years (to pay off their debts) and their house has increased in value from when they bought it – say by 25% – then there might not be enough equity in the property to cover this.
However, if you want to take out equity release and your own home is worth less than what’s owed on it, then there will also most likely be a shortfall. If that happens, then mortgage lenders might agree to let borrowers make monthly repayments of £500 instead of £600 – or they could offer an interest-only repayment plan for uptime!
Ultimately, there will always come a point when people need help with finances because of circumstances outside their own control – even healthy adults may find themselves struggling with bills due monthly during these trying times.
For some people, though this will mean having no choice but sell up and move away from family and friends; not everyone wants this option!
Equity release can be a good debt-paying strategy for those people who want to stay put, and it might not just pay off your debts but also provide you with some peace of mind during retirement!
The Steps To Start Using Equity Release To Pay Debts
If you think that equity release could be the right debt-paying strategy for you, then here are some of the steps to take.
Let me show you:
- Speak with a mortgage advisor, who will help determine your eligibility3 before proceeding.
- Work out how much money is needed and what’s owed on your home – this might involve considering selling up or increasing monthly repayments in order to clear debts more quickly!
- Get legal advice from a solicitor about any risks involved (such as whether there are restrictions), and plan carefully if borrowing against property requires joint ownership4 between spouses or partners.
Consider appropriateness when self-managing: it may not always make sense to use equity release if you have other assets available such as investments and Savings Plans, and you might need to think about the risk of your home value going down.
- If equity release is right for you, then take out a loan from a lender at an interest rate that matches the repayment plan – which can be variable or fixed-rate!
This debt-paying strategy could still allow homeowners to live in their own homes while paying off debts; it’s worth considering if this would be preferable to having no choice but sell up elsewhere.
And because there will always come a point when people need help with finances due to circumstances outside their own control (even healthy adults may find themselves struggling), equity release can provide some peace of mind during retirement.
Are There Any Drawbacks?
There are no drawbacks to this debt-paying strategy – the downside is that equity release might not be an option for all people.
The most important thing, though, is ensuring you’re eligible and have spoken with a mortgage advisor before proceeding!
Equity release can provide some peace of course during retirement but will depend on what’s required.
If your own property isn’t worth enough or has restrictions, then it may not make sense to use it as a debt-paying strategy.
There could also be other assets5 available such as Savings Plans which need considering when self-managing.
Furthermore, while equity release won’t affect income or assets in any way (like other options), borrowers still shouldn’t rely 100% on their home value going up because they could end up in negative equity.
Ultimately, though this debt-paying strategy could still allow homeowners to live in their homes while paying off debts; it’s worth considering if this would be preferable to having no choice but sell up elsewhere!
If you’re thinking of using an equity release product and want some peace of mind during retirement then speak with a mortgage advisor – they can also help determine your eligibility before proceeding.
There are no drawbacks associated with these products, although the downside is that it might not always make sense for all people who use them as a form of borrowing against the property.
The most important thing about using these products, though, is ensuring you’ve spoken to a mortgage advisor first so that there will be no misunderstandings or misrepresentations of the product.
Equity Release Could Be Your Solution
If you have borrowed money in order to buy things like a car, furniture, etc., and are struggling with monthly repayments, equity release could help pay your debts off more quickly by providing you with the funds upfront.
It’s also worth noting that there is no age limit for those who can take out an equity release plan – so if you’re nearing retirement and don’t want to leave anything behind when you die but need some extra security financially during your golden years, then this might be perfect!
For many people living on low incomes or unemployment benefits (including careers), it will not make sense to borrow any more than they already do in order to clear their debt because of the interest payments involved.
Equity Release provides a way around this problem by using your home as security and borrowing at a lower rate.
The bottom line?
Equity release is not the right solution for everyone, but it could help clear debts some people are struggling with the monthly payments on while living in their own homes!
In a nutshell,
Equity release could be a good debt-paying strategy for those who would like to stay put but still need help with finances due to circumstances outside their own control. This is because it could pay off your debts and provide you with some peace of mind during retirement!