A Release of Equity Can Help Fund Your Next Home Renovation Project
- March 10, 2014
- Jasper Kent
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Home renovations can be an expensive project and many people struggle to accomplish them without some form of financial assistance. However, for the over fifty fives, many avenues of conventional lending are not available to them because of their income restrictions or age. Equity release schemes have been designed especially for the over fifty fives age group. They allow retired people to obtain a cash lump sum for any purpose secured against the value of their home, without the need for monthly payments and with a guarantee that they will have the right of residency for the rest of their lives. You may wonder how you can calculate how much you can borrow, in order to decide if it is feasible for your renovation project, but you may be surprised at how easy it is.
Steps to Calculate How Much You Can Borrow
There are a number of online and free equity release calculator tools which have been designed to help you to calculate how much you can borrow. You will need to be prepared with some basic personal information and financial information about your home. The information needs to be as accurate as possible, so there are a number of steps to help you calculate how much you can borrow accurately.
• Work out how much you need: Many people prefer to find out what the maximum equity release possible is, but it can be a good idea to work out exactly how much you need for your renovation project. This will give you a good basis for working out straight away if the equity release schemes would provide sufficient funds. You may be surprised when you calculate how much you can borrow, at how much you would be offered. If the amount is a lot higher than you need, you could explore options such as a drawdown mortgage which provides an initial sum with a draw down facility for additional funds if they are needed. You would only pay interest on the funds which have been drawn down, which could save you a great deal in the long term.
• Obtain up to date balances: If you have an outstanding mortgage or secured loans on your home, it is a good idea to obtain up to date statement balances. You will need these figures to calculate how much equity is available in your property.
• Research market values of properties: The accuracy when you calculate how much you can borrow will also be affected by under or over estimating the value of your home. It is a good idea to research the market values of properties in your area which are similar to your home. There are a number of websites which offer valuation tools based on properties which have sold in the last six months, by entering in the details of your home and the postal code, they can provide an accurate assessment of the value of your home,
• Use a number of different calculator tools: Each calculator is linked to a certain range of equity release schemes. In order to calculate how much you can borrow accurately, it is best to use a number of different calculators. This will provide a better idea of the products available to you from throughout the marketplace.
• Compare plans: It is also a good idea to compare a number of different plans. While some plans may offer a higher equity release amount, you may find that these plans cost a great deal more in the longer term because of a difference in interest rates.
Once you have managed to calculate how much you can borrow and determined that it is sufficient for your home renovation project, you should speak to a professional adviser who specialises in equity release. There are a great number of accredited and experienced advisers widely available. They will be able to assist you in assessing the benefits and limitations of equity release in general and specific schemes. This will enable you to have all the information needed to make an informed choice about whether you would like to proceed further and begin an application.
If you are looking for a way to finance your home renovation project but have found obtaining finance difficult because you are aged over fifty five and have a fixed income, equity release may provide the solution you have been looking for. The first step will be to calculate how much you can borrow, but it is important to familiarise yourself with the potential benefits and restrictions of equity release. Equity release schemes are designed to be a lifetime plan, so it can be costly to repay the loan early, with early repayment penalties and fees. Therefore, it is important that you understand the financial implications before you commit.