Equity release plan– go for the better option

The
equity release market has recently grown in size and has seen entry of many new
players. The people availing the equity release services have increased
considerably in the recent past. With the cost of property increasing and with
the interest rates also on the rise, the equity
release schemes have come as a breather for many. The equity release plans
allows the owner of the property to get tax free funds and allows him the
liberty to not pay it instantly, and in some cases do not pay back at all. This
has attracted a lot of property owners to avail this facility. It is actually a
boon for the elderly people who own properties ot for people who want their
future to be secure and do not want to rely on anyone but themselves. The model
that the equity
release plans follow is very simple. Take the money now in lieu of the
property you own. Either pay it back in installments, or if you cannot, then no
need to worry. You will not be bothered in your life time with that. After your
death the money will be repaid.

Of the equity release
plans available in the market the most used one is the lifetime mortgage plan.
With the huge success that it attained the companies providing equity release
services came up with another equity
release plan known as the draw down plan. This plan allows you to release equity as
and when you need it, hence providing a lot of flexibility to the payment. In a
drawdown plan you do not request for the entire sum of money at one go. Instead
you plan your withdrawals at different stages. The withdrawals may be at
regular or irregular intervals as well. You have the facility to even ask for a
monthly income. With this kind of arrangement you can always make use of the
best of facilities by withdrawing money only when you need it. It offers a
great deal of flexibility. Moreover, the interest on the equity released is low
as you withdraw lesser amount of money. Though it offers a lot flexibility and
more choices to the owners of property, it reduces the amount that one can
leave as an inheritance. Also the since the interest on drawdown mortgage is
compounded it multiplies very quickly. Hence the actual value of your property
reduces for you. In some cases there is also restrictions on the minimum amount
that can be released. The drawdown equity release plan is just an extension of
the lifetime mortgage scheme which is a huge success in the US and UK markets.

ArticleSource: ArticlesAlley.com

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Be aware that all plans will reduce the value of your estate and might affect your entitlement to state benefits. If you are thinking about taking out an equity release plan read through ‘Is It Right For You?’ For all information go there- http://www.keyrs.co.uk/

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Equity release plan– go for the better option