When equity release started a few years ago, many people frowned at the idea. The loans seemed to target seniors who did not have a stable income source. The loan required them to use their property against the loan and have no control over it. Perhaps, the most controversial aspect of the loan was that the interest rates were too high. The amount could be so high that when the creditor sold the property, its total value was still not enough to cover the principal amount plus the interest.
Given how strict the terms were back then, the government decided to step in and tried to make the terms fair for everyone. These days, you will find a lot of people not worrying about their decision to obtain this type of loan. They know that it is fair enough.
Interest rates are still high
Although interest rates are still high, they are not as high as they used to be. Despite the amount, the debtors do not need to pay anything any time soon. The creditor will only sell the property when the owner dies or goes into hospice care. Therefore, the amount is not a huge issue.
No negative equity release policy is in place
Another reason why it is now fair is due to the implementation of a‘no negative equity’ policy. It means that when the sale value of the property is lower than the total loan, the beneficiaries do not need to pay the remaining amount. For old people who do not want to burden their loved ones when they are no longer alive, this policy change is significant.
Equity release advisers are now available
There was a time when this loan seemed very attractive, and lots of seniors obtained them even if they did not understand the details completely. Now, everyone who gets this loan receives the necessary information to make the right decision. Equity release advisers are experts in the field. They have worked with many creditors in the past. They can answer questions related to equity release. They are also honest with those who intend to obtain a loan regarding if it is the right thing to do.
Given these reasons, you do not need to worry about such loans anymore. As long as you stick with a reliable company that offers equity release loans, you will be safe. You need to start preparing your documents before you begin the application process. You also need to ask a valuation officer to come over and check the property, so you will know how much it is worth. You can also decide on the percentage that you are going to borrow.
Although the terms are a lot better now than they used to be, the government is still trying to make the necessary regulations so that those who decide to obtain this type of loan will not have a hard time. It means that you need to be aware of any changes that could drastically change the terms.
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