How to Get the Most Out of Your Home Equity
Equity release loans are a popular way for older people to get access to funds in their twilight years. They typically come with an easy repayment plan, and can be paid back at any time. However, there is always the risk that your equity will drop significantly before you have repaid the loan.
For a start, this means that you should never use an equity release loan to cover your living expenses, but instead only for a home improvement or other project.
This is because any significant dip in the value of your property will inevitably have a knock-on effect on the repayment plan – not least because it reduces how much money can be taken out each month without having to repay more than the agreed amount.
Equity release loans are a good way to get access to funds if you need them and they come with all the benefits as described above. However, make sure that you do everything possible before taking one out so that you don’t regret it later!
While there is always the risk that your property may lose its value before you’ve repaid the loan in full (as mentioned), experts say this will happen to only around one in four people. What’s more, if your property does suffer from any falls in worth then repayments can be changed so as not to cause financial difficulties later on. Equity release loans are easily manageable and come with minimal risks – but remember: do everything possible first by considering other avenues such as downsizing or renting out rooms so that you don’t end up taking more than necessary out of retirement income.
As long as you are careful, equity release loans can be a really good option for aging homeowners.