What is Equity Release & How Does It Work

Hello, in this video we look at what equity release is, how it works and whether it would be suitable for you. You can read more about these type of schemes here - https://ukcareguide.co.uk/equity-rele...

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Here is a transcript of this video.

What is equity release and how does it work

Hello, I’m Rose and in the next 3 minutes I am going to explain what equity release is and how it works.

Firstly, let’s start with what is equity release.

Well, in a nutshell, if you are over 55, it is a way of unlocking some of the value you have built up in your house and turn it in to a tax-free lump sum!

When it comes to taking the cash out of your house, you can do this as a single lump sum, in smaller amounts over a period of time or you can combine the two.

Now that you know what equity release is, let's talk about how it works.

When stripped back to basics, equity release schemes work by enabling you to release funds (known as ‘equity’) currently tied up in property assets.

This makes equity release an attractive option for over 55s who wish to use the money to enjoy retirement, or set some aside for imminent or future care needs.

Equity release schemes work by lending homeowners a lump sum or regular income (usually on a monthly basis), in return for a portion of their property.

However, you should note that money is lent against a value that amounts to less than the market price of your property, and interest is accrued on the loan.

Whilst the benefits are clear, equity release schemes won’t be suitable for everyone.

They are however a fantastic option for couples and individuals without savings or additional assets, who would like to use money currently tied up in their property to pay for care or just enjoy their retirement.

For further information, I’d recommend you watch our videos that talk about the advantages and disadvantages of equity release and also the different types of products that are available.

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