Equity Release

Also Read - Getting on the Property Ladder | Mortgage Conveyancing | Mortgage Protection

If you are a homeowner whose mortgage is less than the buildings market value, then you are a homeowner with equity in their home.
Perhaps you are interested in releasing some of this equity for use in another area? Releasing this equity could be cheaper than arranging alterative finance.

What is Equity Release?
Equity release is a term used for the process of creating finance from the value of a home without having to move out of it. This equity is the difference between the amount remaining on your mortgage and the current market value of the property. This equity can be released by securing a loan on the equity or by re-mortgaging your property. This then leaves the you with finance to invest or use as you see fit.

Finance raised from equity release can be used for home improvements, which could increase the value of your home. Perhaps improving your homes security appeals to you, investing in security gates, plastic windows or lighting can be relatively cheap compared to the peace of mind they bring.
You may spend a lot of time in your garden or want to turn it into a space where you will spend more time. Equity release used to fund landscaping or developments in the garden should turn it into a unique space or an expression of your personality. There have even been occasions where parents have used the finance released from equity to help their offspring onto the housing ladder.

As with all finance involving property or the home you are cautioned to take any and all advise available and to be aware of any terms and conditions involved before agreeing to secure any further debt on your home.
If you fall behind with the repayments on a loan or other finance secured on your home then the finance lender can start legal proceedings to repossess the property and then sell it to get back their losses. Then as well as losing your home your credit rating may be adversely affected, making obtaining further credit that much more difficult.

Remortgaging - Re-Finance your Home.
If you are a homeowner with equity in your property then you may be interested in a remortgage. The most efficient way to release the equity from your home is to remortgage it. A remortgage means switching the mortgage on a home to a new lender, or remortgaging could be used to free up equity on a property to create fresh finance. How this works essentially is you remortgage for more than you currently owe and use the remainder of the finance as you see fit.
It is important that you look into this to see whether there are other ways you could meet your financial needs before you make a commitment on using a remortgage in this way.

Homeowner Loans - Secured Loan Finance.
Alternately, if you have equity in your home then you may be interested in applying for a homeowner loan to release it. The home loan allows you to borrow money at a far better rate than an unsecured loan because your home equity is used as the security and you are deemed less of financial risk by lenders. However a loan secured on your homes equity may only raise a smaller amount. This amount could be adequate for your needs, however there are loan products that permit finance at amounts greater than your homes available equity.
A homeowner loan or a secured loan uses your home for its security meaning better rates and a more flexible repayment term for you. Because with this security the lender considers they are taking a lesser risk granting you the homeowner loan. Your home could be at risk if you do not keep up repayments on finance secured upon it. Homeowners should always consider carefully before securing any further debt on their home.