Clients can spend their money for any legal purpose that they wish and this list is not exhaustive by any means. However, the most common uses are :
Debt consolidation by repaying either secured or unsecured debt such as mortgages, credit cards and loans.
Supplementing retirement income by using draw-down facilities
To provide emergency funds
Buying a second property or a holiday home
Providing financial support to children and grandchildren for such matters as clearing debt or paying school/university fees
Helping children and grandchildren on to the housing ladder
Funding for care in your own home or providing domestic assistance such as cleaner or gardener
Provide money for essential home improvements
Purchasing a new car or funding holidays
Inheritance tax planning
Maintaining or improving a good standard of living in retirement therefore providing sound peace of mind
Equity release is a solution for those who wish to pay some or all of the interest or make capital repayments to prevent the debt from rising.
Some homeowners worry that taking out a roll-up Lifetime Mortgage means the size of the loan increases as the interest on the initial loan accumulates over time.
Plans from several providers now address these concerns by offering the homeowner the opportunity to either pay some or all of the monthly interest on the loan and/or make ad-hoc lump sum capital repayments.
Either - the homeowner is given the option to pay all or part of the interest for a fixed period (for example, 1year, 5 years or even up to the lifetime of the loan).
From the end of the interest payment period, the interest on the loan rolls up at the rate agreed at the start of the contract.
If the homeowner decides they no longer want to pay the interest during the period agreed, the loan reverts to a roll-up Lifetime Mortgage and no further monthly interest payments are required.
Or – the homeowner can pay a percentage (typically 10%)of the original amount borrowed each year without penalty. There is no compulsion attached to this facility.