A common situation that many retired Britons face is the struggle of living on a limited pension and personal savings whilst living in an equity rich property. Having cash tied up in your property instead of your pocket can be a frustrating situation but equity release plans could be the perfect solution to reversing the situation and freeing up your cash.
There are several reasons why individuals want to release equity from their property; perhaps to make improvements around the home, buy a new car, pay for a holiday or simply to make life more comfortable overall. You could even use the extra money to help family members climb onto the property ladder too. Equity release plans can be an easy way to essentially borrow money secured against the value of your home, with the debt being repaid from the sale proceeds after your death or entry into long-term care.
Equity release plan is an umbrella term for a variety of different schemes that provide you with options best suited to your own personal situation. You can generally choose from receiving a lump sum, a regular drawdown or even both. The lump sum can help you with any immediate plans you may have, whilst a regular drawdown could be just the boost you need to settle comfortably into your retirement.
A major benefit of releasing cash from your home is tax exemption. Any money released from your principle residence through an equity release plan is classified as tax free, which helps to increase the amount you receive a little bit further. It’s important to remember that if you were to invest any of the money you release, tax may be payable on any income or growth accrued.
Another important point to note is that with equity release, you can continue to live in your own home throughout the duration of the plan. However, releasing equity from your home could affect your tax position, your eligibility for means-tested benefits and ability to move or sell your property. It could also reduce – possibly to nothing – any inheritance that you decide to leave. You are also still responsible for keeping your home in good repair throughout the duration of the plan.
It is beneficial to explore other options before deciding to release equity from your home including downsizing to a smaller property or using existing savings and investments.
Indeed, many people have found equity release an effective way of releasing readily accessible capital from their home, enabling them to afford the life they want in retirement. Therefore, it may prove beneficial to investigate the options available to you and speak to a financial adviser to make sure you fully understand the features and risks of equity release.
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.
By: Victoria Cochrane
Posts Tagged Tax Exemption
College graduates can lavishly spend the money earned during the first year of their jobs but in the next couple of years, they will to save money to get their dream home. Low salary and rising expenses are the two poles of the earth which can never meet each other. However, there has to be a way out.
Financial companies are collaborating with real state companies, so that they can make housing loans more affordable. India is a developing country and its economy is increasing day-by-day. Many banks are providing flexible housing loans to people, so that they can live in their dream houses.
Housing loans have got various names in the financial market like home equity loans, house loans, home loans etc. These home equity loans are always in a great demand as these are the most important needs of people. Such loans are also known as lifetime loans as most of the people take these once in their lives. These days, getting home loans have become almost easy. Whoever has got a good job with a handsome salary, can definitely go for the housing loans.
Of course, people can get the home loans after applying them but there are many benefits of these loans which all people should know. Going for a housing loans means getting a rebate from high tax payments. The Indian government has issued laws which quote that people taking housing loans would have to pay less tax from their yearly income and it has to be abided by all the financial institutions offering such housing loans. When the government of India has raised the green flag for tax exemption on housing loans, then people can take these loans from any well reputed bank.
What about those people who have a poor credit history? People belonging to this category can also apply for housing loans as there are many banks which even offer home finance loans to people having poor credit history. Before offering such loans, most of the banks review these people’s credit history and if these people score well then these people would definitely get loans.
Can home equity loans be converted to business loans? Yes, home loans can be easily converted to business loans. Many banks also offer business or trading loans in the names of housing loans. So, people doing businesses or looking forward to do new businesses can arrange their required money by getting home loans. The money received from home loans can suitably be used for starting one’s own business.
Is it true that home equity loans can be applied through online procedures? Yes, it is true that with the arrival of internet facilities, people can surely apply for housing loans or any kind of loans. It is beneficial for both people as well as financial companies because through online procedure save much time. Going for home loans means people would need many clarifications. For this purpose, people can make use of the websites of various housing loans lenders which would definitely solve all their queries.
By: Jolly Bhat