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When we are young we work hard, buy a home, and pay into our pensions feeling secure that we will be comfortable and enjoy life upon retirement. However, what seemed like sufficient retirement income years ago is now simply not enough. Many of us are experiencing a tight budget. We are literally “low-income” by today’s standards yet equity rich from our home investment. It is out of the question to get a normal equity loan to live above our income parameters. This would be nice for the short-term but devastating in the long haul. Getting into high debt is not the solution. There are available options that will provide you with that extra boost so than you can improve your current standard of living and remain comfortably in your home. Short Comings of Equity Release Plans vs. Current Home Sale Price A big business over the last several years has been the Equity Release plans on the market. These programs cater to pensioners that need additional income to be more comfortable in retirement while allowing them to remain in their homes. This may seem like the perfect solution but these plans are expensive. You need to be aware of what these plans actually do cost and how they can eventually drastically deplete the profits of your home sale price. There are different equity release plans on the market. Your house sale price is not negotiated with you in these plans. The usual plan is called a lifetime mortgage. On this plan you are required to take out a loan against the equity built up in your home. This loan is usually for no more than forty percent of your home’s value. You are then given a lump sum and the interest keeps adding up on the loan until you die or go into care. At that time, the property is sold and the original loan and all accrued interest is paid back out of the house sale price received. If any money is left, it will go to your heirs. To give you a general idea of the high interest costs accrued: Say you received £40,000 at an interest of 6.5% and remained in your home another twenty years. The loan pay back amount would be over triple or, in this case, a little over £140,000. So for a cost of over £140,000 you received £40,000 to spend over 20 years, which divided out is an additional income of £166 each month. Doesn’t the expense of that small addition income seem rather high? And what of the house sale price would be left for your heirs? Based on your current house sale price there would be a lien for 120% of your home’s value.
Article Source: http://www.articlebase.info
For a free consultation and sound advise on the options available to receive a fair house sale price and remain in your home, contact www.quicksalefast.co.uk”>Advanproperty. You deserve to have a better quality of life in retirement and Advanproperty can help.
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