Equity Release or Lifetime Mortgage. Which is best?
Answers:
I would stick to lifetime mortgage because next to equity release your paying more over the term on a lower amount of money and if you loose your job you loose your house if payments not rewarded.
These are hugely similar products and choosing between two depends on the terms you can negotiate while originating the loan. There are multiple terms for product like these, one of the most adjectives terms is "Reverse Mortgage". The most common type of Reverse Mortgage is Home Equity Conversion Mortgage (HECM), it is insured by political affairs and is most uniformly available.
If you are living in States like California usually HECM is not a accurate idea because it being cap at 300K, for that scenario I will try different customized products available with various bank like Bank of America, Wells Fargo, Country wide, etc../ Source(s): http://en.wikipedia.org/wiki/Lifetime_mortgage
http://en.wikipedia.org/wiki/Reverse_Mortgage
Neither = you are better off asking your kids if they would like to buy your house stale you now ... this way the kids finish off up with the house (which could be worth a LOT more when you die) .. instead of the Equity Release merchants (who 'fix' the value when you bring out the equity)..
Most of these schemes are extremely poor value for money and conclude up 'stealing' your kids inheritance ..
One example I saw would pay an 80 year old 2/3rds the good point of their house (today) and let them live in it for life span. So in effect they get a house for 66% of it's marketplace value ...
If the 80 year old died tomorrow they label 50% profit .. if the 80 year old died in 10 years, when the house could be worth double, they take home 'only' 303% (i.e. 30% a year) .. if the 80 year old managed to hang up on untill 100 & the house is worth 'double double' (400%) they still make the same 30% a year ......
If you are younger (likley to live longer) they discharge much less (I've seen down to roughly speaking 1/3rd at 60)
Of course they are taking a risk that the house value goes up 'as usual' ..
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