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Retired and Stuck with a Mortgage?

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John Higgins

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[email protected]

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Retired and Stuck with a Mortgage?

It's a sad fact that even with the best laid planning you can still end up with a mortgage after you have retired. This can happen for all sorts of reasons. You may have a small amount outstanding because an endowment policy did not reach its predicted payout figure, or perhaps you rejigged your borrowing along the way and that has meant that the loan was still outstanding after you have retired.

There are other reasons, too. You might have lost your job or had a period of sick leave, or your personal circumstances may have changed in any number of ways. However it has happened, it is no fun still having a mortgage after you have retired. Now is the time you want to be free and enjoy yourself.

There are some possible solutions to this dilemma, but there is no magic solution unless your numbers come up on the lottery, of course.

Equity Release Schemes offer a number of ways of reducing or eliminating the mortgage that you currently have and this in turn reduces or eliminates the monthly payment that you make. You might even have a lump sum left over to carry out home improvements, buy new furnishing, go on that cruise or swap the car for something more reliable.

A"lifetime mortgage" comes in more than one variety but, in essence, you have a mortgage on the property where you do not make any repayments for now. The interest is added to the outstanding balance and you repay this figure when you come to sell the property. There are a couple of variations on this, but that is it in simple terms.

Such a scheme would remove the problems of cash flow but there is the downside hat your home will eventually be worth a great deal less to you or your loved ones in the future. It will all deepened on personal circumstances as to whether this is a good idea.

The other option is an Equity Release Plan whereby you effectively sell some or all of your home and receive a cash lump sum, a regular income or a combination of the two. Again, when you come to sell the property or when the property is due to be passed to your legal beneficiaries then it will be worth a great deal less than if you had not entered into the arrangement.

You can find out more about these schemes and how to safeguard yourself at the consumer resource centre www.equity-release-expert.co.uk

It may go against the grain to consider such a move and it has been said by some that such a transaction is a last resort. This may well be the popular view but more and more retired people are going into them. The statistics that we cannot ignore are that people have bought their houses over the last 50 years and the population has aged. The combined effect of these two points means that there are more asset rich people of retired age that ever before. Add the effects of inflation to the equation and Equity Release Schemes start to make more sense, especially where there is little or no cash in the bank.

It is crucial to discuss such a move with children or other beneficiaries before going ahead. This can save a great deal of heartache later on and gives the parents the reassurance that their offsprings give their approval for the arrangement, even if means that they are the ones that will ultimately be worse off. What child would wish an uncomfortable and financially fraught retirement on their parents?

These schemes are not to be confused with Sale or Rent Back arrangements . <a href="http://www.equity-release-expert.co.uk">Equity-Release</a><br> Plans are regulated by the Financial Services Authority and they contain certain safeguards such as the right to live in yoour home for the rest of your life and that you will never face negative equity.


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