Matters appertaining to equity release are not as simple as they are when they are first presented to you, because there are so many variations on a theme. Before you decide to apply for any equity release mortgage plan, there is need to carefully evaluate all options available because in today’s market there are more & more choices. People have made mistakes due to ignorance or failing to understand what each plan entails. It may depend on the lender, but basically all terms are related in one way or another.
For instance, analysing & calculating compound interest is very tricky; when you might think that it will be favourable on your side, you realize that indeed it isn’t. For a long time now it has been an unfavourable factor that has discouraged clients from applying for equity release schemes. The compound interest calculator used by equity release companies are likely to focus on annually compounded interest accumulated, which means that in the long term, on average, the lifetime mortgage balance with have approximately doubled over a 10-11 year period.
This leaves young borrowers from age 55 with a disadvantage because they can secure funding, however as their life expectancy is much longer than most, the equity release mortgage balance will be much higher by the time they die. However, as earlier said, it somehow depends on the arrangements between the borrower and the lender at the time of signing the contract.
Therefore, it is so important to get the lowest equity release interest rate possible to slow down the compounding effect of the interest. It is advisable to understand all terms of service before any deal can be reached because you definitely don’t want to have no inheritance on your conscience forever.
Get independent equity release financial advice from the most professional persons in this industry before you can think of exchanging your property. Remember the amount of hard work & sacrifices you made in the process of building your home, and imagine the pain of seeing this disappear with the rolling up of interest. This is a time when you need peace of mind more than anything & the knowledge you have made the correct decision.
However, there are strategies that can be used to ensure that this trend has not been reached. Equity release experts are in a good position to advice you on the right steps to take every time things are looking bleak. The earlier you take the right steps the better. You should not wait until everything has been done so you can take action.
Remember all equity release companies advised by authorised equity release brokers will advise on companies that are members of SHIP (now known as The Equity Release Council) so you have certain security measures in place. These will include the important no negative equity guarantee which means that if you do start young & borrow a high loan-to-value then you can never end up owing more than the actual value of the house. Hence, peace of mind reigns even if compound interest seems to be working against you.
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