If,
because of your age or financial situation, you can't find a
mortgage
lender willing to take you on, consider getting a
relative or friend to guarantee your loan.
You get the cash you need without going into debt, but you have
to give up your current home.
The pros and cons of
a loan
You get the cash without having to move house, but you have
to repay what youve borrowed.
And, because of your age and/or financial situation, to get
a lender to take you on, you may have to secure the debt against
your home which means you could lose it if you don't keep up
the repayments.
The interest
rate is likely to be higher than for a mortgage and the term
will probably be quite a bit shorter, so the monthly payments
will be more.
Of course, this does mean that, in the long run, your debt will
cost you less as the following example shows.
Borrowing £20,000 using a repayment
mortgage over 15 years at an interest rate of 6.5 per cent
would cost £174 a month, or £31,360 in total.
Borrowing the same amount using a personal loan over 10 years
at an interest rate of 8 per cent would cost £243 a month, but
only £29,118 in total.
The pros and cons of
equity release
Again, you get the cash without having to move house, but your
estate must repay what youve borrowed plus any interest due
after you die.
This is likely to require the sale of your house, so it can't
be passed on to your heirs.
And because equity release plans are far from cheap,
this could eat up the bulk of their inheritance.
In general, these plans are complex and poor value, and they
should be treated as a very last resort.
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