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Mortgage equity release is
the process whereby you free a sum of money
that had previously been paid into your mortgage.
Common methods of achieving this are either
through remortgaging or negotiation with the
lender.
Mortgage equity release can be useful
to anyone who requires a capital lump sum.
Depending on the method of equity release,
the planned spending of this money may first
need to be approved by the mortgage lender.
Equity release can be used to fund a variety of different
aims, including investments of various forms and debt consolidation.
A common use is to use equity release for home improvement, aiming
to increase the value of the property and therefore negating any
losses incurred through higher interest repayments. Mortgages also
tend to offer lower rates of interest than other forms of borrowing
and debt, making equity release a popular option for those looking
for a means of finance or debt consolidation.
Releasing equity from your mortgage
will mean that you will be repaying it for
longer. Interest rate payments will increase
in the short term due to the increased borrowing,
and you will pay more for your mortgage in
the long term.
This can depend on the fees charged
by your lender and any other clauses included
in the contract. The increased interest repayments
and longer repayment time should also be taken
into account. Depending on the mortgage lender
and the way you’re conducting the equity
release, there may also be restrictions on
what you can use the money for. If the equity
release comes as part of a remortgage, there
will also be a number of costs associated with
that.
It is important to figure out how
much capital is required and what it is needed
for. Equity release is not necessarily as simple
as a loan or bank withdrawal, and should therefore
be carefully planned before any moves are made.
Be sure to know how much capital will be needed,
with allowances in the case of home improvements
or similar projects should costs overrun. Once
the amount is decided, do research or if needed
consult with external advice such as your accountant
to decide if equity release is the best method
of raising the necessary funds.
Be sure to factor in any
increased costs that will come from a mortgage
equity release, as well as any savings such
as better interest rates on a remortgaged property.
If the decision is made in favour of equity
release, two methods are available. One is
approach your existing mortgage lender about
equity release and the second to consider a
remortgage. In both cases, further steps will
depend on the lenders themselves.
Equity release will either be available
from your existing lender under various conditions
or through a new lender after remortgaging.
For more details regarding
Equity Release contact us using our callback
request facilities.
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