Equity launch is usually a sort of lifetime equity release mortgage that is secured on your own household & assists people who are retired & over 55 to access money tied up in their property.
The definition of ‘equity’ is the value of your property minus any secured loans placed upon it. This is the equity that you can withdraw to assist you financially in later years. This money can then be spent on anything you require with no restrictions being placed upon it by the lender.
People find the most common & useful reasons for releasing equity to be debt consolidation. This would involve settling any mortgages, loans or credit cards which are proving difficult to maintain.
Once these debts are repaid, they have the effect of reducing your monthly outgoings & giving you extra disposable income to enjoy
Other reasons for releasing fairness could be a new car, home improvements, holidays or generally making your lifestyle more comfortable.
From my 10 years of experience in the fairness launch industry I have found the uses for the tax free lump sum to be limitless, but for many; life changing!
So how does equity launch work?
These schemes provide you with a tax free lump sum or an income which can be used to help you financially in retirement. The plan has NO fixed term & will therefore run for the rest of your own, or your partner’s life.
The lender will place a first legal charge on the residence so that when the property is finally sold they receive their payment first. Any money left over is then passed onto your beneficiaries as detailed in your Will if you have made one.
Evidently, fairness launch can be a sort of home loan but without the monthly payments. Consequently, as there are no monthly payments on these house loan schemes & they have NO effect on your own outgoings at a time of life when minimal expenditures maybe required.
Two forms of fairness launch schemes are available & these are a life span home loan & a house reversion scheme:
Lifetime mortgages have proved to be the most popular option. In practice, life time mortgages are a mortgage loan for retired people with the interest accruing being added to the balance annually. The amount to be repaid at the end of the day is dependent on how long the scheme runs for & the final sale value of the property
The Dwelling Reversion scheme is effective by the homeowner selling a percentage of the property. The residence reversion company will then retain a part or full ownership of the property. The reversion company then retains this percentage when the house is eventually sold. Therefore, there is actually a guaranteed inheritance for the children.
Mark Gregory is the founder & director of Fairness Release Supermarket who have been accredited ‘Best Financial Advisers’ at the Fairness Launch Awards 2008. As a result of his experience, he has exclusivity to deals with some of the UK’s leading financial providers.