Funding Your Dream Vacation with Equity Release. What Does It Cost?

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Too many individuals put their vacation plans on wait because they don’t think they’ll be able to afford them.

Taking that ideal vacation with the help of a home equity loan has never been easier & more accessible.

Equity release consultant John Lawson walks us through the cost of equity release & why using the equity accumulated in your property to take your dream vacation is good.

What’s Equity Release?

Equity release is a term used to describe solutions that allow people over the age of 55 to access the equity (capital) in their homes.

You have the option of releasing the cash in one large lump payment, many smaller instalments, or a combination of the two.

How Does Equity Release Work?

Equity release allows you to take a tax-free lump amount of the value you’ve built up in your house.

There’s no need to relocate, & you’ll retain ownership of your property. With equity release, you don’t have to make monthly payments unless you want to.

The loan is generally repaid when the final borrower enters long-term care or passes away.

Types of Equity Release

A lifetime mortgage & a home reversion scheme are the two most prevalent methods of equity release.

Lifetime Mortgage

You’ll keep 100% ownership of your home if you take out a lifetime mortgage. You can get money in a flat sum, monthly instalments, or a mix of the two.

Unless you desire to return the loan with the profits from the sale of your property, the loan, plus your accrued interest, is then repaid with the proceeds from the sale of your property.

Home Reversion

You’ll sell all or part of your home in return for equity in a home reversion arrangement.

The lender will get their share when the house is sold after you’ve died or transferred into a care facility.

How Much Money Can You Borrow With Equity Release?

For example, suppose you’re 68 & own a property worth £240,000. You could potentially borrow £80,000 at a fixed interest rate of 4.69 per cent for the rest of your life interest rates vary according to your unique circumstances, the product chosen, & other factors).

The above is a sample rate & will vary on your unique circumstances.

What’re the Costs of Equity Release?

Paying for guidance & application fees are included in the first equity release set-up charges.

Some advisers offer a fixed fee of £900 to £2000, while others charge 1.5% to 2% of the equity released.

The application or arrangement fees cover the equity release provider’s legal & administrative costs.

It’s worth noting that the expenses of equity release can be compensated by the monies released from your house, & there are ways to keep your expenditures down.

The total expenses of the equity release procedure range from £1500 to £3000, not including the compound interest owing.

These fees may differ based on the lender & representation you choose.

Our Take Away

One of the most practical methods for paying for your trip is an equity release plan. Just remember to do your homework before agreeing to anything with anyone.

At the absolute least, make sure you only work with firms that follow the Equity Release Council’s guidelines. There’s no limit to how much of the globe you can see with the money you’ve amassed from your estate.

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