How To Make Sure You Have Enough Money After You Retire
Some people look forward to retirement because it means they’ll have time to visit their loved ones, enjoy a bit of relaxation, take up new hobbies, and perhaps even travel the world. However, other people find the idea of retirement daunting because they know they will have a smaller income than they had when they were working. It’s not easy to save a huge amount of cash during your working years, and your pension might not be enough to cover your expenses.
For this reason, many people choose to take out an equity release loan, which is a loan provided to you based on the value of your home.
It’s worth saying at this point that if you’ve already taken out an equity release loan, you might benefit from switching to a different provider. Northern Rock has now left the equity release market, and that means your loan has been overtaken by JP Morgan and subsequently Phoenix, which uses Papilio UK to administer the loans. If your loan is managed by Papilio UK, you might get a better interest rate by switching to a provider such as Aviva or LV, and Papilio will waive all early redemption fees to make sure you can’t lose out.
However, if you’re just looking into equity release plans for the first time, here are a few reasons as to why they’re beneficial.
- You won’t have to repay the loan through monthly instalments – If you’re already struggling to make ends meet, your finances will be further strained if you have to meet expensive monthly repayments. With an equity release plan, your provider will be repaid in full when your home is eventually sold.
- Your loved ones will not inherit your debt – Due to the fact that the total cost of your loan can never be higher than the value of your property, you can feel rest assured that your loved ones won’t have to repay your debt when you pass away.
- You’ll remain the full owner of your home – With a lifetime mortgage – the most popular type of equity release loan – you won’t have to give a portion of your home to your loan provider. They’ll simply take the money you owe them from the profits of your home’s sale.
Are There Any Other Options?
In reality, you might not be eligible for a personal bank loan if you don’t have the income to meet the required monthly repayments. However, let’s face it, you don’t want to be paying off your loan on a monthly basis if your pension is your only income.
You could look into borrowing money from family members to secure the best rates, but they might not have the money you need in order to make ends meet.
Alternatively, you could choose to sell your home and move to a smaller property, but there are a lot of fees involved in doing so and you might prefer to stay where you are, in which case an equity release plan is your best option. You can Find Responsible Equity Release here to search for a loan with the best interest rates.