You want to take a loan out now because you need the money to buy something important. However, at your age, you worry that you will be unable to repay the loan. When you die, your children could end up carrying the burden. The good thing is that securing a regular loan is not the only way for you to get money at your age. You can also consider equity release.
It is technically a loan, but you don’t need to pay it right now. You tie your property to the loan provider. The interest will keep piling up over time. Once you are in hospice care or you die, the provider has the right to sell the property. They will then take the money from the sale to repay the loan. The remaining amount will be for your children, or anyone else you decide to leave the property to.
What if the interest keeps piling up?
Some equity release providers offer high-interest rates. Since you are not repaying the loan, the interest will keep piling up year after year. If you die after several years, the interest might already be very high. You might worry that you have nothing left to leave your children. Although it is a real concern, the good thing is that you can find equity release providers with a “no negative interest guarantee”. It means that regardless of how much the interest has piled up over the years, the provider can’t ask for an amount more than the sale value of the property.
Your kids will still have enough
Most of the people who tried equity release before did not regret their decision since their property still ended up becoming valuable upon sale. Therefore, the profit was more than enough to repay the loan, and the children still ended up with something from it. You might have nothing else to leave your kids except for your property, so it is crucial that you leave them what they deserve.
You need to consult with experts
It is tough deciding whether or not you will go for equity release. You want to use the money now, and you have no other source of income given your age. However, you might also worry that you will have nothing for your kids once you die. The good thing is that you can speak with equity release advisers to determine what the best option is for you.
For equity release, you can choose between a lifetime mortgage and home reversion. Each choice has pros and cons. You need someone to show you the numbers and explain to you the differences. You might also have questions on the reliability of your chosen equity loan provider. These experts will help compare the choices and give you honest reviews regarding their services. They have worked with other people in the past who were also thinking of taking out equity release. They understand the industry well and can give you the best information possible.