Releasing equity from your property can be an uplifting & exciting period of life for many retirees. However, research work should always be undertaken beforehand as once equity has been released from the property, it cannot be usually replaced. Therefore, when equity advice is sourced & accepted, the monies should be used efficiently & maximised, as once released there is no going back.
Nevertheless, experience has show the key equity release benefits are alleviating what is potentially the longest holiday of your life. This can be for both lifestyle changes & debt consolidation purposes resulting in the reduction of monthly outgoings & thereby increasing disposable income.
Having possible worked for 40 years up until retirement & undoubtedly experienced financial highs & lows along the way, retirement should be the time to enjoy the fruits of your labour. The evidence of this will be shown by the equity built up within the main residence.
Equity release on property owned by a retired person should be virtually mortgage free by the time an application is submitted. Otherwise it will need to be cleared with some of the equity release proceeds. The key to equity release withdrawal is not to take any more cash than is required for the first 12 months. Otherwise cash left on deposit in the bank or building society will not be attracting a better interest than that charged by the equity release mortgage company. This is classed as poor advice.
To counter this, drawdown equity release schemes can provide the solution. Such drawdown plans will calculate how much of an overall cash facility the lender will allow. This is calculated based upon the age of the youngest person & the property valuation. Following confirmation of the size of the loan facility, the applicant can then decide how much to initially withdraw. This will usually start from a minimum initial cash withdrawal of £10,000, leaving the remainder t to sit with the UK equity release company. Only interest is charged on the amount withdrawn; none is charged on the monies left in reserve with the equity release drawdown lender. Here lies the benefit of drawdown schemes. By adopting the best practice of drawdown, less interest will therefore be charged, leaving greater cash available for the future retirement years. This is just one of the reasons why it is always important to receive the best equity release advice. Without it can be an extremely costly affair.