|
Mortgages & Lending
Home | Back to Back Loans | Equity
Release Schemes | Offshore Mortgages
The equity release scheme is an interesting concept
that allows homeowners to release some of the capital tied up in
a property that may have greatly appreciated in value. The released
capital is then invested in a product that generates an extra income
and at the same time, allows the homeowner to remain in the same
property.
The way this works is that some specialist companies take a stake in the property and become the joint owner, while others arrange a loan on a mortgage type basis. On death or when the house is eventually sold, part of the proceeds go back to the specialist company or lending institution.
Though this is, in principle, an interesting product,
its early history has attracted some misunderstandings. When the
company purchases a portion of the property, normally set at 50
percent, it is entitled to 50 percent of the selling price, even
though the property value may have trebled. In the case of a mortgage
type basis, the income on the investment product that provides the
extra income must pay the interest on the mortgage. This erodes
any income potential and if the product has an equity base, then
this may have even more adverse erosion on the capital and income
potential.
Langtons Wealth Management
Provide independent, qualified and regulated financial advice to the expatriate community on the Spanish Costas, The Balearics and Canary Islands. |
Obelisk Private Finance
Equity release, mortgages and remortgages. Private financial solutions for individual financing needs. |
top of page
|
