Many young people think that retirement is a dream come true, but they probably don’t realise how difficult it can be to make ends meet with just a pension. Some people are unable to save a significant amount of money during their working years, and that can make retirement seem like a very scary prospect. But how can you secure some extra cash when you hit your senior years?
You might think your first point of call would be to look into a bank loan. However, banks are now stricter than ever with regards to who they provide loans to, and you might not be eligible for a personal loan if you no longer have an income from work. Plus, the monthly repayments can be rather expensive, and that’s the last thing anybody needs if they’re struggling to make ends meet as it is.
Another option is to approach family members and loved ones for a loan, and that might be a good idea because their interest rates are likely going to be the lowest available – if they charge any interest at all. The main drawback with this option is that family members might not be able to lend you enough cash and you might not want to feel like a burden by asking them in the first place.
At this point, you might be thinking that there is no possible way for you to secure some extra cash without selling your home, but it may be a much better idea to get an equity release loan.
Equity Release Loans – The Basics
An equity release loan is provided to you based on the value of your home. One of the biggest benefits of such a loan is that you’ll never be required to make any monthly repayments because the loan is repaid in full when your property is eventually sold. The two main types of equity release plan are:
- Home reversion – You’ll sell a portion of your home to the loan provider.
- Lifetime mortgage – You will own 100 percent of your home and the loan will be repaid using the profits from its sale.
As you might have guessed, the second option is the most popular due to the fact that you don’t have to give any of your home away. However, the interest can add up to a large sum over a number of years, and that makes finding the best interest rates crucial. You can click here for Responsible Equity Release to get you on your way.
If you have already taken out a loan with Northern Rock, you ought to consider switching to a new provider because they’re no longer in the market. Northern Rock sold its customer books to JP Morgan who were subsequently overtaken by Phoenix, with the loans administered by Papilio UK. Interest rates are have fallen since Northern Rock were in the market, and that means you could get a better deal by switching to Aviva or LV.
If you’re looking into loans for the first time, you’ll need to make sure you find the best interest rates because that way, you can feel confident that your loved ones will still inherit some money when you pass away.