The idea of equity release might be novel to you. As such, you need the necessary information before you decide if you will take it. Like any other loan, getting equity release comes with a risk. If you don’t have the right consultant advising you, things could go wrong.
You won’t know the total cost
When you borrow money, you only look at the amount you borrow and the interest rates. Apart from these considerations, you also need to know the other fees you need to pay. Sometimes, application fees and origination fees are quite high, and you need to prepare the amount before you get the loan. You will end up getting surprised when you arrive at the office to apply for the loan, and they ask you to pay for fees you were not ready to pay.
Your family will not have an idea
When you consult experts, you also need to take your family with you. They will deal with the equity release companies when it is time to sell the property. It happens when you die, or you decide to move to a senior care facility. At that point, the property will be up for sale, and whatever the value is, the lender and your family members will divide the amount. There are instances when the relatives get close to nothing after deducting the loan plus interest rates. If they don’t understand these details, it might come as a surprise to them.
You might choose the wrong provider
Usually, consultants won’t take sides. They will not tell you which provider to choose, but they will tell you the pros and cons of each option. You will decide in the end, but you must make a sound decision. You don’t want to land an equity release provider that offers easy application and approval, but the terms are unfavourable.
You won’t know which loan to take
There are two types of equity release. The first one is the lifetime mortgage, and the other is home reversion. The lifetime mortgage is the more popular choice between the two. In brief, the first one allows you to retain ownership of the property, while the latter releases the ownership to the lender. There are other nuances you need to consider, and without clear explanation from experts, you could end up with the wrong decision.
You won’t know your rights
Even if you borrow money from the loan provider, you still have the rights to your property. You can start repaying your loan in small quantities or decide to wait until you die before beginning the payment, through the sale of the house. You don’t need to hurry paying the loan, and the loan provider must not force you to repay the loan before you are ready. Your consultant will explain your rights.
You can read essential information online regarding equity release, but you still need the advice of consultants if you wish to get in-depth information.