If you own a property which is unencumbered (no mortgage) or if you have a mortgage on it, you are likely to have capital in the property which is in fact yours. This capital is the equity you have in the property. You can release some of this capital to either use at your own leisure or to make improvements to the property.
The products available on the market today are various. If you need 40% or less you don’t have to show income today. There are banks happy and willing to release this amount. This would be a normal mortgage, however a term up to 5 years of interest only is available. Even if you are 70 years of age this would not be an issue for the bank.
You can in fact release up to 80% of the value of the property – regardless of age. There is a product available through Orange Finance which is either for a new purchase or equity release. However you have to show income. You can be the oldest person in the world – but a term of 30 years is still available. And you can even have part interest only for up to 10 years. New products are coming on the market almost weekly. And we are talking about very interesting products introduced both by Spanish banks as well as foreign banks.
So let’s talk about equity release in a different form. There are products available where the bank will advance, normally up to 80% of the value of your property. A part of that can be given to you for personal use. The other part will be put invested on your behalf. The mortgage cost for these products is normally offset against the income you receive. This product is also referred to as Offset Mortgage. However some products have extremely high set up fees as well as yearly charges and administration fees for the investment vehicle which will in fact take years before these costs are recovered. Also returns in the region of 15% have been mentioned. This is of course achievable, but anyone who offers this please treat it with caution. We suggest if you chose to go for one of these products we recommend you get all figures before you go ahead. They can turn out to be extremely costly also the returns promised may not turn out to be the full story.
Orange Finance continuously searches for new products. We have just launched the product mentioned above where the age of the person is irrelevant, we can still arrange 30 years and up to 80%. We are in the process of launching 3 different Offset Mortgages from 3 different banks. They are all individually designed for different needs. Just fill in the form and send or fax to us. We will contact you to confirm the receipt and as soon as the products are launched you will be notified straight away. You are also welcome to send us an e-mail.
Whichever form of equity release you go for, the bank will take a charge on your property. This charge in turn reduces or eliminates the inheritance tax which may be the main reason for some clients.
Article by Orange Finance
http://www.orangefinance.eu.com/