Some Tips To Remember While Considering Equity Release

It is a fact that many people who own their homes look rich, but are actually poor when it comes to cash. The best solution to these problems is equity release schemes. These are also known as home income plans. Equity release schemes actually give you some financial space and allow you to unlock some wealth held in the bricks and stones of your home. Most of these schemes include borrowing money against your property and only repaying capital and interest when the owner is moved to an institutional home or dies.

However, it is important to analyze the current market trends and other factors when you go ahead with the decision. Many popular websites can help you to a great extent when you want some guidance about equity release. About a decade ago, interest rates went up and property as well as share prices went down. As a result, people who had borrowed against their homes in equity release funds found themselves in a problem because of negative equity. Therefore, you need to make sure you understand what you are getting into before you go ahead with equity release.

Some Tips That Would Help With Equity Release

1) Compound interest rates – Interest rates related to equity release schemes are usually double the rate of home loans. Lenders argue and say that high rates are justified because they do not have any idea when their money would be paid back. As a result of such high rates, the size of debts just doubles in about ten years. Therefore, this may be an expensive solution for a person.

2) Risks – Many lenders provide guarantees that a borrower may live in his home as long as he lives. They also provide a borrower with other important safeguards. This sort of assurance is needed and you should never go ahead with a lender who could provide this security.

3) Discuss with friends and family – When you are borrowing money against your home, you make sure that your children or relatives do not inherit much from your property. You should always discuss your plans with relatives and friends who will be affected by your decision. On the other hand, equity release schemes are very effective in avoiding inheritance tax liabilities. This is because homeowners are able to spend more wealth before they die.

4) Be sure to report any issues – One mistake that many people make is to remain silent even when they feel that something is going wrong. You should always report matters to concerned authorities if you feel something is not right with the whole deal. If you are unsatisfied with your financial services or financial service providers, you should report them to the concerned authorities.

5) Professional advice – It is necessary that you ask for professional advice as a lot of money is involved. You should also make sure that you go through all the documents carefully. You should always avoid all kinds of contracts that you are unable to understand. You may also go for websites like for professional guidance.

Author’s bio: Sachin is a free lance writer who writes on different topics such as technology, business, finance, gadgets. He holds Master’s degree in Finance Management. He has published more than 500 articles about various topics, including commercial investments and individual investments. He is currently working for He loves to travel and make new friends.

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