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Equity release mortgages need planning
Mon, 13 Mar 2006
An equity release mortgage loan can seem like an excellent idea, especially for older borrowers who are cash-poor but asset-rich. Accessing the wealth tied up within a property may be the most valid financial option in some cases. However, recent expert advice indicates that although equity release mortgages can be very worthwhile, they need to be well considered and thoughtfully planned.

One expert was reported as saying: "The first stage is to consider whether you really need equity release. There are options for raising money other than equity release, and if you can use them, it may well be better for you."

Equity release is commonly based around a lifetime mortgage. This requires the borrower to not make payments, instead adding up the interest until after death, when the house is sold and the lender receives their share. Another form of equity release is termed a reversion scheme, when a borrower sells a proportion of the ownership of their property. However, some experts advise that you will receive less than half of its market value. The cost of equity release mortgages are calculated on a borrowers’ life expectancy, and as such are not available for customers below a set age.

Before committing to equity release, experts say, it is essential to consider all of your financial options and take financial advice.

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