Equity release means taking out a loan against the portion of your home that you’ve already paid off. For example, if you’ve paid off 50% of a £150,000 mortgage, you may be able to borrow up to £75,000. It’s an option typically available to people aged 55 and over.
Remember though, that this loan is secured against your entire home. If you can’t repay the loan, you may lose your home. Think carefully before doing this.
Equity release can be a useful way to raise funds to help pay off other debts or fund retirement. Often, the interest rate on an equity release loan is lower than the interest on unsecured or non-mainstream debt, so you may be able to save money in the long term.
You can either take an equity release loan as a lump sum, or in regular smaller payments. The balance of the debt is paid off when your property is sold upon death or when you sell the property to move into long term care.
If you are due to retire soon but are unable to do so due to outstanding debts or a low pension, then equity release could be a good option. For more information on using equity release as an option to settle outstanding debts get in touch with Creditfix for free, impartial advice.