Pension is something which makes a retired person live in pleasure and peace since that is the only source of income for them. But due to the bad effect of the huge recession which hit the market a year back, the pension amounts reduced extremely. This made the living tough for retired people who had not foreseen this day and made a huge saving for their old age. Some of these people had their own property and tried to sell them to make a decent living but they could not sell their property or give it in mortgage because that may pose a threat of them being homeless. To resolve these issues release equity in home made an entry in to the market.
The release of equity scheme is also known as lifetime mortgage plan. To help you understand the basic concept, here is a brief explanation. A retired person will opt for this plan from an organization. After settlement he can live in his house till death and more over he will receive an amount monthly or at once depending up on the equity value of the home. He can use that amount in paying the outstanding loans, credit card dues, buy a car etc. But once the person dies the property will be owned by the organization that provided the plan. Thus he can enjoy the rest of his life without worrying about money. A very good point of this plan is; it is tax-free throughout its tenure. This makes this plan a more attractive one for retired people as after retirement paying tax will be quite a burden.
The retired people who opt for release equity in home plan will be given the choice of receiving the money as a monthly installment or as a one time payment. It is advised to always opt for the monthly installment as accepting a one time payment will greatly reduce the equity value of the house. If there is not an absolute necessity for money, it is better to go for the monthly payment as that will also ensure that monthly bills and expenses are met.
The biggest disadvantage of release of equityscheme is that the retiree person opting for this plan would not be able to leave any property for her or his heirs. Hence this plan is most suited for people who have no heirs who would inherit their property after their death. Leaving out this one big disadvantage, the release equity in home is an extremely good option for retired people who do not have enough savings or do not get enough pensions to meet unforeseen and unfortunate circumstances like sudden hospitalization. All that is needed is a property in their name and the rest will be take care by the institution offering the scheme.
If you are a retiree and having trouble making ends meet with your meager pension amount but very conveniently have a property of your own, take the help of your agent to understand the details of release equity in homeplan and you can then spend the rest of your days in peace and calm.
