Before You Get A Reverse Mortgage

There are many things that you need to look at before deciding that a reverse or equity release mortgage is the most suitable way of releasing money from your property for you. In this particular area of mortgages, there are even more variables attached to the different deals offered by the different providers than those attached to more standard mortgage products.

As with any form of finance, the real key here is that you understand all of the details before committing to any particular deal. Once you have figured out the numbers on exactly what kind of income you’re going to need to make your life more comfortable then you’re in a position to look at what’s on offer.

One of the first things that you need to remember is that you don’t have to release all of the equity in your home. Any financial institution that you may be dealing with will probably be quite keen to release all of the equity and finish up actually owning the property. Please bear in mind that traditionally real estate always beats inflation and there is nothing to suggest that it will be any different in the future.

So then rather than the whole property lets say you only release the equity for 50% of it. The other 50% will continue to appreciate over time and even in a few years its value will be significantly more than it is today. This is the thing that you really need to work into any sets of figures when you’re contemplating with this type are reverse mortgage deal. For example, if you were to release all of the equity in your home and put it in the bank, 10 years from now, that money in the bank even with the interest being paid by the bank will be worth significantly less than the property would be to you if you actually just held on to it.

We understand that the reason you’re considering this kind of deal is so you can adjust your cash flow and make your lifestyle more comfortable so we are not suggesting that because of the example outlined above that you should keep your house as it is because that wouldn’t solve the original problem. At the same time, what the above example does outline is that if it’s at all possible it probably makes a lot of sense to keep some sort of a stake in the property because it will definitely appreciate at a greater rate and be a more stable asset over time than virtually any other form of investment you might consider making with the cash that you’ve released. In light of this, probably the best type of scenario is where you release only part of the equity tied up in your home and you still keep a stake in the property.

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