There are a number of reasons why impaired equity release schemes are beneficial. Here are ten good reasons to consider such a scheme:
1 Offers Maximum Release of Equity from your Home
You can borrow the maximum value of your home’s value (less any outstanding mortgage) and you can choose from a number of options in maximising the equity release. You can downsize, take a tax-free lump sum or opt for the draw-down option of a monthly amount as a way of increasing your monthly income stream.
2 Using Health Conditions as a way of Maximising Income Stream?
Ill-health is one of the many good reasons to consider impaired equity release schemes. Certain health conditions can be a way of receiving improved terms and increased amounts on loans and monthly income streams. The list of conditions is now extensive and ill-health can secure the maximum from the equity in your home.
3 You Remain in Your Home
An enhanced or impaired equity release scheme enables you to remain living in your home until you die or move into long-term care. Even if you live longer than your actualised life expectancy, you will still be able to remain in your home without suffering a penalty or being asked to repay the money.
4 Full Protection from Legally Regulated Bodies
Impaired equity release schemes and the industry as a whole is protected by both the Financial Conduct Authority and the Equity Release Council. This means that in the event of malpractice by your provider, you are protected as a consumer.
5 Protection of your Home’s Value
You can take the choice of a lower amount of equity release, thus protecting a percentage of the value of your home to leave to your family as an inheritance. You can have the best of both worlds and not reduce the total value of your inheritance.
6 No Arrangement & Valuation Fees
Not all providers will offer no-fee for valuation and arrangement fees, but there are providers who have these benefits attached to some of their impaired equity release schemes.
7 No Negative Equity to Worry About
Negative equity is a thing of the past with impaired equity release schemes. The market value of your house at the time of the release of the loan cannot change. The money cannot be paid back after your death if the value of the house falls below what the original investment was. The rate of interest is fixed for the term of the loan so that you know exactly how much will have to be repaid upon your death.
8 No Repayments During Your Lifetime
There are no repayments due until you move into a care home or you die. Therefore the income stream you receive is not burdened with large repayments.
9 Option to Repay the Loan Early (subject to penalties)
You can repay the loan off earlier and while there are fees to pay for doing so, if you come into some money from other sources, this option is always there.
10 Further Option Later Down the Line to Borrow Further Amounts
In some cases, you can borrow further down the line if you haven’t released all of the equity in your home. You might fancy a holiday or have a child’s wedding to pay for and the money is there for you.
The above may vary with different providers of impaired equity release schemes, but this is an overall general guidance for the benefits of equity release plans. There are risks, too, of course, as with any financial product, but as interest rates are low and there are no signs of improvement, you can make that pound stretch further and still come away with some money if your home increases significantly in value.
