Whether it’s to purchase a holiday home or to invest a second home that is closer to your family, purchasing another property is something that lingers in the mind of many older individuals. If you’re over 55, own a property and are eligible for equity release, then it’s possible to use a scheme in order to fund the purchase of another home.
Whatever your potential reasons for purchasing a second home, an equity release scheme could be a great way to secure the funds needed to invest in another home.
Equity release if you’re an older homeowner
While you can always remortgage your existing property to purchase a second home, you have the option of an equity release if you’re an older homeowner aged over 55. You can use an equity release calculator from Equity Release South East in order to see just how much money you could withdraw and put into your second home.
There are several advantages to using an equity release scheme over other methods of purchasing a second home.
- There’s a no-negative equity guarantee. The FCA enforces a regulation that protects consumers from negative equity. This means that you’ll never owe more to the lender than the value of your property. Should the lender not keep to this promise, you will be protected by the FCA.
- The money from an equity release is tax-free. When taking out a lump sum from your home, it’s completely tax-free unless you decide to place it into a savings account. If you decide to make an investment then tax may be payable on any income or gains that you receive.
- Equity release is easier to access as an older homeowner. If you’re an older homeowner then you’ll have a much easier time applying for an equity release scheme than a remortgage. This is because most lenders won’t let you apply for a mortgage later on in life unless there are special circumstances.
- There are flexible plans available. Equity release plans are flexible. You can even choose to keep your interest down by making regular interest payments if you prefer, and there are a number of ways to protect your inheritance for your beneficiaries.
- There are no monthly repayments. If you were to remortgage in order to purchase a new home, you will be required to make monthly repayments. However, with an equity release scheme, there are no monthly repayments unless you want to keep the interest down and everything will be repaid once you pass away or move into a long-term care home. Add to this the no-negative equity guarantee and you will have more peace of mind when purchasing a second home.
As you can see, there are several advantages to an equity release scheme as a method of paying for another home over the typical remortgage route.
If you’re interested in learning more about equity release and how it can be used to purchase another home, then don’t hesitate to get in touch with us at Equity Release South East.