Can equity release help me to manage my debt problems?
June 17, 2013

According to research released in February this year, an increased number of Scottish residents are now relying on releasing equity from their homes just to pay every day bills.
In previous years, equity release has been used as a way of affording luxuries, such as a holiday abroad or a car upgrade. However, the economic crisis has left the majority of people with less disposable income, and many residents in Scotland are now using it in order to make ends meet.
Carried out by Key Retirement Solutions, the survey revealed that one third of respondents has now released equity from their home in order to afford bills and emergency purchases. Director for Key Retirement Solutions, Dean Mirfin, said: “Scotland has experienced the largest increase in equity release out of all regions in the UK.”
Equity release can provide you with the option to either unlock a tax-free lump sum from your home or gain access to a ‘flexible borrowing reserve’. However, equity release isn’t right for everyone and it’s important to get professional advice as there are many restrictions to consider.
The process involving equity release is very similar in Scotland as it is in the rest of the UK. To be eligible for equity release, you must be a homeowner aged 55 or over, dependent on which type of equity release is most suited to your situation.
There are three types of equity release to consider.
Interest only lifetime mortgages enable you to keep ownership of your home, whilst still borrowing against its value. Monthly payments of interest apply but the original borrowed amount isn’t repaid until the property is sold.
Lifetime mortgages work in a similar way, except interest is added to the mortgage and the total repaid when the property is sold. Flexible lifetime mortgages are also available, which enable you to access funds as and when required. With this type of equity release, you only pay interest on the total amount you borrow.
Home reversion plans are generally only offered to those over 65 and offer a cash lump sum in exchange for selling all or part of your property. Residents are also given a ‘lifetime tenancy’ rent free. It’s important to be aware that for this type of equity release, home ownership (the deeds) will be transferred to the home reversion provider.
Choosing the right equity release for you is a big decision and requires the help of an experienced professional. At Scotland Debt Solutions, we can carefully consider all your options to ensure you’re doing the right thing.
Equity release is subject to certain fees, may affect means-tested benefits and can reduce the value of your property. Why not call Scotland Debt Solutions today for an informal chat to consider whether it’s the right move to get your finances back on track.

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