The History of UK Equity Release Schemes
Equity release is an increasingly attractive option for those seeking financial relief. However, this was not always the case, and it's interesting to note that these plans first became available in the UK in 1965. When first introduced, the main goal of these plans was to create an option for those who had invested in property but needed cash funds to cover certain expenses.
In the 1970s, the prices of houses in the UK soared, and this made it possible for financial institutes to offer clients and even wider range of options in terms of equity release plans. At first, the equity release market took off, and a large number of property owners signed these agreements. However, for those who opted for the "home income" plan, things didn't pan out quite as they'd hoped. This plan meant that the property owner would need to agree to buy an annuity as well as an interest only mortgage loan. It was marketed in a way that it appealed to those who were seeking an additional monthly income to subsidize their pensions. They only needed to make monthly payments to cover the interest.
In the 1990s, however, interest rates spiked, and house prices dropped. This was disastrous for many, and this resulted in a ban on this particular plan. Not to mention the bad reputation equity release received as a result of numerous unhappy clients. This was, however, during the earlier stages of these plans and, since then, several factors have changed.
By the end of the 90s, the prices of houses were on the rise again, and interest rates were improving too. Financial experts came up with improved equity release plans with added protection policies in place to protect everyone concerned. Despite its earlier slump, equity release made a remarkable comeback and, today, previous records are being smashed with more and more pensioners choosing these options to solve their financial troubles. As added reassurance, homeowners also have the help and protection of rules set out by the Equity Release Council (ERC) and all plans need to conform to specific criteria. One of the most important protective measures in effect is the "No Negative Equity Guarantee". This means that, no matter what, the amount payable upon the conclusion of the deal will never be greater than the value of the home. In other words, your equity release plan will never result in debt since selling your property will cover the full amount at least.
Source by Andrew Larkin
In the 1970s, the prices of houses in the UK soared, and this made it possible for financial institutes to offer clients and even wider range of options in terms of equity release plans. At first, the equity release market took off, and a large number of property owners signed these agreements. However, for those who opted for the "home income" plan, things didn't pan out quite as they'd hoped. This plan meant that the property owner would need to agree to buy an annuity as well as an interest only mortgage loan. It was marketed in a way that it appealed to those who were seeking an additional monthly income to subsidize their pensions. They only needed to make monthly payments to cover the interest.
In the 1990s, however, interest rates spiked, and house prices dropped. This was disastrous for many, and this resulted in a ban on this particular plan. Not to mention the bad reputation equity release received as a result of numerous unhappy clients. This was, however, during the earlier stages of these plans and, since then, several factors have changed.
By the end of the 90s, the prices of houses were on the rise again, and interest rates were improving too. Financial experts came up with improved equity release plans with added protection policies in place to protect everyone concerned. Despite its earlier slump, equity release made a remarkable comeback and, today, previous records are being smashed with more and more pensioners choosing these options to solve their financial troubles. As added reassurance, homeowners also have the help and protection of rules set out by the Equity Release Council (ERC) and all plans need to conform to specific criteria. One of the most important protective measures in effect is the "No Negative Equity Guarantee". This means that, no matter what, the amount payable upon the conclusion of the deal will never be greater than the value of the home. In other words, your equity release plan will never result in debt since selling your property will cover the full amount at least.
Source by Andrew Larkin
YORUM EKLE