If you’re already over 55 and you have reached retirement age, getting a loan might be challenging for you. Even if you’re lucky enough to receive one, the terms might still be unfavourable. You need to pay the loan soon, and you will receive a massive penalty for late payments. The interest rate might also be way too high.
Alternatively, you can consider equity release. This loan allows you to get money if you’re willing to place your property as collateral against the loan. It might seem risky since you could lose the property if you’re unable to repay on time.
The good thing is there’s no need to pay soon. With the setup of this loan, there’s no need to rush the payment. The creditor will have the right to sell your property if you die or go into hospice care. The sale value of the property will then be used for the repayment of the total loan you accumulated over the years, including the interest. The remaining amount could go to your kids or whomever you designated as beneficiaries.
If you wish to repay the loan right away, it’s possible. The problem is that with some companies, early repayment would mean penalties. Therefore, you should only proceed with this type of loan if you’re willing to hand over to the creditor the right to sell your property when you die. Your kids won’t have control over the property anymore unless they’re willing to buy the entire property based on the selling price of the creditor.
You won’t feel pressure
With equity release, you won’t feel immense pressure to repay soon. It’s not like other loans where you need to keep worrying about how you’re going to pay the amount due the following month. If you fail to do it, you might have to pay huge penalties.
Given your age, you don’t want to stress even more because it’s not good for your health. You want to live a carefree life now that you don’t have responsibilities. You don’t want a life where you need to keep worrying about unpaid loans that could soon incur significant penalties.
Consult with advisers
If it’s your first time hearing about equity release, you might want to talk to advisers first. They know a lot about equity release, and they will enlighten you about this type of loan. You will then understand the two sides of obtaining this loan. You might find it challenging to understand some terms, but the advisers will simplify things for you. Check out http://www.55plusequityrelease.com for information from equity release experts.
Talk to your kids
If you plan to get an equity release loan soon, you need to inform your kids about it. Let them know that you’re thinking about using your house as collateral for a loan. They might expect to inherit your property when you die. You don’t want to cause chaos once you pass on. Tell them that you need the money now and there’s no other choice.