Equity release schemes can be a great way to unlock funds built up in your property and make your retirement years more financially stable and enjoyable. However, recently numerous frauds and scams have arose in relation to the scheme, which means those who wish to become involved in equity release must do so carefully, in order to protect their finances and home.
What is an equity release scheme?
Equityrelease schemes are designed to help homeowners between the ages of 65-80 receive monthly payments or a lump sum in exchange for their home upon selling or death. When signing up for a release scheme you will be given a percentage of your home’s value to spend and will also be able to continue living in your home until death or if you move into a care facility or smaller property. Upon any of these instances the company will take ownership of your home and receive all payment and interest upon its sale.
What are the advantages of an equity release scheme?
This Scheme will allow you to continue living in your home, while receiving extra money during your retirement years. This will allow you to take the trips you always dreamed of, pay for improvements to your home or just to make your later years easy and free of financial stress.
What are the disadvantages of an equity release scheme?
You will not be able to leave your home to your love ones upon death and they will receive no money from the sale of the house. An equity release scheme may also mean you are not entitled to certain government benefits.
Scams and equity release schemes
Another downside of this type of schemes is the potential danger of scams. This can range from fraudulent companies making claims on your home without recompense, to investment companies targeting your extra funds and encouraging you to financially back a certain stock or credit, which reaps only them any benefits. Some tips to avoiding such frauds and scams include:
- Thorough research and independent advice: Whenever large sums are involved check the company thoroughly, search the Financial Services Authority Register and seek the recommendation of friends or family members before taking out any equity release schemes or investments.
- Avoid calls out of the blue: If a company contacts you without you having any prior interest in such a scheme it is likely to be a fraudulent company. Persistent calling and harassment is also a sure indicator that the business will not be to your benefit.
- Look out for impersonators: Some companies may attempt to impersonate registered and established companies, so it is always in your best interest to double check all information against independent sources.
- Opening and closing: If a caller transfers you from themselves to a more senior advisor to arrange payment and close the deal they are more than likely to be fraudulent and you should avoid sharing your details.
- ‘Tip-Off’ Investment: If someone encourages you to invest in a stock or credit due to a ‘tip-off’ you are likely to lose your money. Favourite schemes of such fraudulent investors include wine, carbon credits and precious metals and stones.
An equity release scheme could be the ideal choice in helping you spend your retirement happily and free of financial worry, but it is always a good idea to thoroughly check all information concerning the company you are choosing and to seek independent advice before taking out a scheme or investment. To find out more information see www.equityrelease123.co.uk.