With global warming before the world’s norm, the temperatures keep declining, and thus the needlework and knitting business is very lucrative now with people looking to stay warm. However, due to the economy crumbling, you might lack the funds to fund your business. If that is so, you need to consider taking the most reliable financial product in the market right now, equity release1. Moreover, with the equity calculator, you can figure out how much capital you need to unlock quickly.
What’s Equity Release?
Well, this is a mortgage scheme that allows you to untie the equity tied up in your home. It works by enabling homeowners aged 55 and above, those with homes within the remits of the UK and have estates worth more than €70,000 to release some cash from the value of their homes. The money is tax-free, and you’re allowed to use it as you want. Therefore, if you’re going to set up your needlework business, clear your debts or pay for your long-term care, equity release is your best bet.
The Financial Conduct Authority2 regulates equity release plans, and most equity release companies are signed up to the Equity Release Council3. The trade body sets the standards for release. According to the rules stipulated by the Council:
- All the equity release interest rates must be fixed. If not, the plan provider should offer you an upper limit or cap that’s safe for the lifetime of the mortgage.
- You have the right to reside in your estate or until you move into residential care, provided that you abide by the terms and conditions of your equity release scheme.
- You can opt to move or not relocate to another property as long as your plan provider’s satisfied that your new residence provides continued security on your equity loan.
- All equity release schemes should feature the ‘No negative equity’. It means that when your estate is sold, and solicitors and agents fees have been cleared, if the amount left isn’t enough to cater to the unsettled loan, neither you nor your family will pay more than you owe.
- For security’s sake, the Council also provides strict guidelines on the sales process. It demands that you can only take out an equity release mortgage if you get proper financial guidance and independent legal advice from a certified advisor.
Unlike most traditional mortgages4, the equity release interest rates tend to be higher, even though most of the schemes have the security of a fixed price for life. The interest is compounded, ‘rolled up5‘ and it accrues over the life of the mortgage plan. Nevertheless, with the various alterations in the financial market today, most of the schemes enable you to make flexible payments to the lender to lower the amount you’ll pay when you pass away or move into residential care. It’s nonetheless, not an obligation since you still have the option of making payments when the scheme ends – when you die or move into long-term care.
Other than the interest, there are more expenses involved when taking out an equity release mortgage and how you walk around them determines the amount you’ll pay at the end. These expenses consist of financial advice fees, lender’s application fees, property appraisal fees and solicitor’s fees.
You don’t have to keep hustling and looking for loan options with hefty fees. With equity release, you can start your business, go on vacation later and even buy that flashy car you’ve always wanted to buy!