4 Things to Know About Qualifying For Equity Release
An Equity Release occurs when a financial institution unlocks the value of your home. This financial institution does that by giving you a specific amount of cash. This cash represents a part of your home’s equity hence the name Equity Release. This Release offers you many benefits. For example, the money comes to you tax-free. You can use it on anything you want including buying assets or paying debts. Staying in the property rent-free is another benefit that comes with an Equity Release. Unfortunately, only a few people qualify for this financing mechanism. Here are 4 things to know about qualifying for Equity Release.
- The Financial State of the Home
Lenders will rarely give you a loan on a home that has some debt attached to it. They know that the other lender might claim the property before you repay your Equity Release. Therefore, one of the principal conditions for this release is a mortgage-free home. Fortunately, some institutions show a bit of leniency on this condition. More specifically, these institutions give releases on mortgaged homes as long as the homeowners demonstrate that they can repay their pending payments. The homeowner must also show that he can pay for the release as well.
- The Physical State of the Home
Equity Releases are available for owners of ordinary homes as long as their minimum value surpasses £70,000. Luxurious homes are also a prime target for Equity Release agents. Determining the value of a home is possible by evaluating its physical state. That includes its state of repair, the renovations on it, and its location. It is worth noting that a home’s lease home is a matter of concern for lenders as well. Usually, they prefer freehold properties, but some of them accept leasehold homes as well. The remaining lease on qualifying homes should be 75 years and more.
- Residency of the Parties Involved
The Financial Conduct Authority (FCA) regulates Equity Releases. The Equity Release Council (ERC) encourages its members to adhere to a code of conduct. The FCA and the ERC are UK-based institutions. The FCA, in particular, is a government institution. It deals with UK operations only. Therefore, the parties to an Equity Release should be residents of the UK for it to have jurisdiction over them. The property in question has to be in the UK as well. It can be in England, Wales, Northern Ireland, and Scotland.
- The Borrower’s Personal Details
Equity Releases are mostly for seniors because they can enjoy it the most. For example, they can spend the rest of their years living rent-free instead of struggling to pay rent each month. They can travel the globe without worrying about their grown kids. Another notable point is that elderly people have cleared most or all of their mortgage debts. That is especially true for seniors above 55 years. Consequently, most financial institutions set 55 years as their minimum threshold for candidates seeking Equity releases. Click http://www.responsibleequityrelease.co.uk/ for more details about qualifying for Equity Releases.