Don't
sign up for an equity
release plan unless you're certain it is the best deal you
can possibly get.
Read, and reread, all the paperwork, and make sure you understand
everything.
Things to check include
The costs
If you're considering a lifetime
mortgage, what is the interest rate? Is it fixed
or variable? Could you do better elsewhere?
Find out if you can reduce the interest charged by choosing
a drawdown plan rather than one that pays out a lump sum.
If you're looking at a home
reversion scheme, what percentage of your property's
market value will you get? Again, could you do better elsewhere?
For both types of scheme, you will also need a full breakdown
of the set-up costs, including arrangement, valuation and
legal fees these could easily add up to a couple of thousand
pounds.
The penalties
Will you face a penalty if you want out of the deal say,
because you come into the cash to pay it off, or find a
cheaper one elsewhere?
If you will, see if you can get a similar (or better) deal
elsewhere with lower (or no) penalties.
The future
If you decide to move house, is the plan portable?
If you can't take it with you, and you can't afford to repay
it and buy a new property, you could be forced to stay put.
If the plan is portable, are there any restrictions on the
type or value of property you can buy?
The worst case scenario
Most plans come with a guarantee that you or your estate
will never owe more than the value of your property.
Avoid ones that don't have this kind of no negative equity
assurance.
Read
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