For some people, there’s nothing better than retirement because it means they’ll finally have enough free time to do the things they’ve always dreamed of. However, for other people, retirement can prove to be very difficult because they don’t have the finances they need to make ends meet. Many people are unable to save a large amount of money while they’re working, and pensions often aren’t enough to cover somebody’s expenses.
If this sounds like you, you might have already received a loan as part of an equity release plan. However, you might want to consider switching to a new provider if you received your loan from Northern Rock.
Northern Rock is no longer in the equity release market and as a result, your loan was overtaken by JP Morgan which uses a company called Papilio for administration. However, interest rates have fallen since Northern Rock provided equity release plans, and if you want to know you’re getting the best equity release rates, you might want to consider switching to a provider such as LV or Aviva.
If you haven’t ever looked into equity release plans, they’re essentially a loan that is provided to you based on the value of your home, and they’re beneficial over other types of borrowing due to the following reasons:
- No monthly repayments – If you’re struggling to make ends meet with your pension alone, the last thing you need is to be paying off a loan month by month. An equity release loan is paid back when your property is eventually sold.
- Your children will never be burdened with your debt – One of the greatest things about equity release loans is the fact that the total cost of repayment will never be higher than the value of your home, and that means your children won’t be liable to pay off your debt when you pass away.
- You don’t have to receive all the money at once – If you want the loan to supplement your pension, you can receive it via monthly installments rather than as a lump sum, and that will help you to manage your finances responsibly.
There are two types of equity release plan available in the UK, both of which don’t have to be repaid until your property is sold. The two options are as follows:
- Home reversion – With this type of loan, you will basically give away a portion of your property to the loan provider which they will use to generate a profit when your home is sold, and you will still be able to live in your property for as long as you like.
- Lifetime mortgage – This is the most popular option because it allows you to keep full ownership of your home. The loan provider will be repaid in full from the profit your home generates when it is sold.
Equity release plans have helped thousands of senior citizens live a comfortable life after they retire, and they could do the same for you. Just make sure you compare the market thoroughly to ensure you get the best deal.