I’ve been giving you many of the pros and cons about Equity release and Home Reversion Schemes. However, there is one very important fact that I should have stressed more strongly.
Interest Rates are really, really low!!!
In fact they are just about as low as they are every realistically likely to get!
Obviously, that makes taking a plan out right now more attractive, but there could well be long term benefits. Most plans operate at a fixed rate of interest so you stay at whatever rate was agreed at the outset. There really is not much room for rates to fall further but plenty of upside, and it’ll happen at some stage, surely. Go for Equity release now and you will be locking in at a low rate.
Makes you think, eh?
Some people who took out equity release a few years ago are actually going to be able to benefit from these incredibly low interest rates because they are so much lower than the schemes they already have. Five years ago, or so, they would have been paying around 8%, but now it’s much more likely that they can get a new scheme at 6%. That means that even with the costs involved in making a switch – and they will be fairly substantial – they may be thousands of pounds better off over the long term.
Perhaps, many, many thousands better off!
Low interest rates may have been a source of problem for you up until now but here they might actually benefit you.
Most people who buy a house don’t ever think that the value of their home might decrease. This is unlike the stock market, where most people understand and accept the risk that stock prices might fall. Now, house prices have fallen, and they may fall further, too. Equity release information shows that you can only borrow a relatively small amount of the value of your home. It depends on your age and so on, but the percentage that you can use for Equity release is a much less than that which you can borrow when you buy a home, for instance.
This all means that the total amount that you can obtain from Equity Release Schemes has and may continue to fall. So, you might be best having a very good look at things right now and seriously consider if this option is for you.
Call me on 0800 612 1028 or contact me using this form http://www.equity-release-expert.co.uk/61/contact-john-higgins/ if you would like some help.
Those falling house prices need not worry you too much, though, because you will have a no negative equity guarantee if you choose an Equity release Scheme forma member of SHIP.
John Higgins does not give financial advice but will help you find
an advisor that you can trust. Please call me on 0800 612 1028.