When we need cash and liquidity, a valuable house cannot come to rescue, unless we sell our home and move into our caravans! This is not entirely true. With equity release schemes you can take out some of the value of your property with no need to sell it or move out.
Equity release schemes are essentially like loans or like part sales. The lending company either gives a loan against the property or it purchases a percentage of the property and pays you for it. Interest is not payable on the loan. Not in our lifetime that is. Interest is recovered by the company after the sale of the house.
The house need not be sold while one is living in it, but is sold when one moves into a care facility or passes away. Of course, there are finer details and terms, but this is basically the gist of it. The same goes with the part purchase option, where the company buys a proportion of the house.
Equity release schemes are a great option for those who wish to generate additional income in their retirement. It is also good for those who need a chink of money but do not wish to sell their property. There are pros and cons to the concept, as there are with any other type of financial product.
Several companies provide equity release schemes so it is possible to compare various options and choose the one that is most suited to you.