When you have a home that is free and clear, you can go through a process where you can get an equity release. In some countries that’s is called a reverse mortgage and in others a lifetime mortgage. There are several benefits to doing so, but there are also drawbacks that you need to consider. It is very beneficial for people that do not have a sizable retirement, but it may not be the best thing in the world if they would like to leave something for their children. Here is an overview of how equity release mortgages work.
What Happens With An Equity Release?
When you have an equity release, you are essentially given a monthly payment, or you are given a lump sum of money. That loan is secured by the fact that the home is free and clear. Therefore, it is an asset that can be used as collateral. You are going to continue to own your property. That is not going to change. You are also able to spend the money however you see fit. However, the drawbacks that occur include the fact that the loan does need to be paid off at some point in time, even if that comes down to selling the home and having the proceeds from that sale paying off what is left. Interest is also going to build up to the amount that you borrow is going to be much more by the time you pay it off if you wait for several years or decades. These are all things to consider before doing an equity release.
How Long Does It Take To Get One Done?
Best suggestion from UK Care Guide – It doesn’t take too long to have an equity release completed. It’s just like any other loan. You are going to go through some type of qualification process, sign papers, and then they will provide you with the loan. The money will be deposited into your account, or they will provide you with this check. The process itself should take no longer than a week or two to fully complete.
You can talk to a lender in your city about this. They will give you all of the details. They will walk you step-by-step through the entire process. If you decide this is something that you would like to do, you can begin to fill out the papers. It’s going to be very helpful you need to qualify for a loan, that you may otherwise not have been able to because you are simply tapping into equity that exists.