You might go back and forth before you decide to get an equity release loan. It is usually for people who are of a certain age. If you are 55 and above, you can get a loan from equity release companies. The good thing is that you do not need to repay the loan immediately. The downside is that you allow the lending company to have legal rights to sell your property when you die. They will take a portion of the sale value as repayment for your loan, and the remaining amount will go to your loved ones.
There are two sides to this decision, so you need to be smart about what you choose. These tips will help you as you prepare to obtain an equity release loan.
Re-evaluate your needs
You need to determine first the reason why you want the loan. If you feel strongly about it, you can proceed with the plan. If you think there are other ways to achieve your goals, you can consider them too. Think about the urgency of the need and why this path is the best for you.
Seek help from experts
It is important for you to know all the details about the loan that you intend to get. You can consult with experts in equity release. They will give you advice based on their knowledge of the industry. They will also study your case and evaluate your financial status to give you in-depth advice before you proceed. They have worked with other people before who also thought of getting equity release. The kind of advice you will receive from these experts will help you finalise your decision.
Inform your children
You need to inform your loved ones about this plan. They might disagree with it. The loan provider will have the right to sell your property when you die. If the people you leave behind do not know about your plan, it could be a mess when you are not alive to deal with the situation. After you understand the process and the terms, you can explain everything to them. They might also have other ideas to help you achieve your goals if they oppose you getting equity release.
Read the terms and conditions
Not all equity release companies offer the same terms. Some of them offer loans to people who are at least 55 years old while others offer loans only for people 60 years old and above. The interest rates may also vary. Make sure the terms include a “no negative interest” clause, which means that if the property’s value is lower than the total amount you borrowed plus the interest, the loan provider will not ask your loved ones to pay the remaining amount.
After going through all these steps, you can decide if you will still pursue this plan. Many people have used equity release, as it does not stress you out while you are alive. Start the application only when you are ready.