Before you choose any particular scheme to release the equity from your home, it is necessary to consider whether you have other solutions to meet your financial requirements. The objective of equity release mortgage schemes is to offer homeowners the opportunity to unlock the value in your property to obtain a certain amount of money.
Different circumstances may make it necessary to obtain money from the equity release schemes. You may need the money to pay for your son’s education or for your spouse’s medical costs. You may also need it to lead a comfortable retired life. However, this is often not the only solution available for your financial troubles.
It is necessary to consider the alternatives you have before you choose to release equity from your home.
Do you have any savings or investments? If yes, you may use them for the requirements you have. However, the high living costs and certain situations make it difficult to save enough money for retirement. If you do not have any considerable savings or investments, you may have to opt for an equity release scheme.
Can you shift to a smaller property or take in a lodger? Often the cost associated with repair and maintenance of a large property makes things difficult for a homeowner. In such a situation, you may sell off the property and shift to a smaller house. However, if you do not want to live somewhere else, you may have to opt for this scheme.
You may also take in a lodger to cut down on the cost of property maintenance. However, if you live on your own and do not want a stranger in the house, this solution may not be suitable for you.
Would your family members help you? Sometimes, your family would be able to help you handle the financial trouble you face. You may repay them after you have recovered from the tough times. However, many individuals do not want to borrow from family members. In such a circumstance, you may have to opt for equity property release schemes.
Are you entitled to State benefits? If you are entitled to State benefits but have not yet applied to these, you may consider this alternative. The means tested State benefit may be of advantage for you. If you avail of these benefits but they are inadequate, you need to understand the impact the equity release may have on this.
Sophia Webb is a financial adviser. She offers a brief description of the reasons that make it necessary to get independent financial advice before opting for equity release mortgage.