Equity Release Examples You Must Know

If you are wondering how you are going to pay for your upcoming long-term care needs, equity release may be an ideal solution. This option can also be an option for borrowing your own money to assist with other financial obligations, such as dealing with these debt collectors:

• Moorcroft Debt Recovery
• DWP Debt Management
• Advantis Debt Collection
• Provident Loans
• Marston Group
• Lowell Financial
• Amigo Loans

However, equity release has some major drawbacks that make it not a good fit for everyone. Here is an overview of what equity release is, several equity release examples, and how DoNotPay can help you get started if we determine that it is the right option for you!

What Is Equity Release?

Equity release allows a homeowner to use some of the value of his or her home while continuing to live in the home. This arrangement allows you to use some of the equity, or cash, that is connected to your home for other purposes without having to immediately lose access to your home. However, it does somewhat lower the total sale value of your home and the amount of eligibility you may be able to get in the future, which means that it is generally a better option for older adults than it is for younger adults.

Equity Release Examples

If you are interested in equity release, your two main options include:

1. Lifetime mortgage
2. Home reversion

A lifetime mortgage is generally the most popular choice. With this option, you may decide to borrow the total amount of money you have access to in either one lump sum or in smaller amounts over time, and you will not have to sell your home at this time. However, this type of equity release builds interest quickly, especially if you are unable to pay the money back.

With a home reversion, you will technically sell all or part of your home to get your money, but you will still be allowed to live in it for as long as you choose to. Once the sale is completed after your death, the provider of the loan you took out will receive a percentage of the total sale that aligns with the percentage of the home's value that you used. You will need to be at least 60 to qualify for this type of equity release.

How Might Equity Release Benefit Me?

Equity release can provide several types of benefits for certain people, although it is important to carefully consider whether it is the best fit for you before getting started. Some ways equity release may benefit you include:

For most people, seriously considering equity release should only be done with the help of a trusted financial adviser. Although specific circumstances vary, this is typically a better option for people who cannot or do not want to downsize as an alternative, do not have a sufficient amount of savings to cover the cost of future long term care needs and either do not have any beneficiaries or have beneficiaries who will not mind any longer being able to inherit your home.

Drawbacks of an Equity Release

Although equity release may be a good option for the right person, it can come with several drawbacks. Therefore, it’s a good idea to carefully consider whether another option might be a better fit for your situation before committing to a lifetime mortgage or a home reversion. Some potentially negative aspects of equity release to be aware of include:

• Your home will generally be sold once the last owner dies or moves out, which means that this is not a good option if you would like to be able to leave your home to your children or grandchildren
• Interest rates can be very high
• You risk owing significantly more than what you borrowed
• You can typically only receive approximately 30-60 percent of the market value of your home
• Only an option if you are at least 55 years old (60 for a home reversion)

Avoid the Need for an Equity Release With the Help of DoNotPay

If you are still considering equity release, especially as a means of avoiding or dealing with debt, DoNotPay may be able to help.

Whether you were just recently contacted or have been harassed for months, DoNotPay can help you figure out whether your debt collector is compliant with debt collection laws. After guiding you through a series of questions, we'll help you determine what course of action you should take, and contact the debt collectors with a demand letter on your behalf. If you choose to report the collection agency to a governing body instead, we'll file the complaint on your behalf.

1. Search "debt collection" on DoNotPay.

2. Answer a series of questions about the debt collectors, including when you were contacted and how you were contacted, so we can determine if they have violated any debt collection laws.

3. Decide which course of action you want to take based on our guidance, such as filing a debt verification request, demanding for the collectors to stop contacting you, or reporting them to a professional trade association.

What Else Can DoNotPay Do?

Once we help you determine whether equity release is a good fit for you, we know you will want to take advantage of the many other services we have to offer. We can also help you:

• Obtain copies of a variety of important documents
• Obtain several types of licenses
• Utilize your credit cards as effectively as possible
• Close or delete accounts you no longer want
• Appeal PCNs

At DoNotPay, we are here to help you find the best possible option if you are struggling to make payments because too much of your money is tied up in your home and inaccessible for other purposes. Contact us today to learn more about how we can help you determine whether equity release is a good option for getting rid of debt collectors or dealing with other financial obligations.