Evolving equity release plans and services
Equity release schemes are relatively new in the market of mortgages, so they are still at their first stage of development, with new possibilties yet to be offered to the public, and regulation issues in process of being addressed. Even if equity release has been around in the United Kingdom for longer than in most other countries, so we have a much wider experience in how they work and how all actors involved in these schemes actually behave over time, there is still plenty of room for expansion in this market.
Technically, equity release deals make up a small portion of the general mortgage market. However, current trends in finances, estate, economy and society, and even the political currents that nowadays direct the decisions of our governments, make it very likely that equity release will expand and develop more and more in the upcoming years. Factors like an aging population and better regulations that protect the borrowers from misleading lenders or unprepared advisors are turning equity release into an even better option for late life financing year after year.
The evolving statutory regulation of reverse mortgages was a much needed action taken by our government as well as other governments in countries where equity release is increasing in acceptance and popularity. In the early years, this practice was mostly unregulated and many lenders incurred in well planned and well thought scams or dangerous practices that harmed the borrowers and gave equity release deals an all around bad popularity. With elder people kicked out of their houses or disowned of their properties, inheritances cut much shorter than intended, and even increasing debt due to negative equity, people started walking away from this financing opportunity. Government intervention and regulations were mandatory.
Equity schemes as investment
The estate market has evolved over the past few decades, and experienced the highs and lows of some financial crisis as well as the transformations in overall lifestyle that affect the sale and purchase of properties. Our economy is changing, with new options available for financial planning and new niches for mortgage deals and other sorts of financial services. The increasing complexty that results of a growing number of options and concerns also makes more room for financial advisors and estate counselors to step into the frame and offer their services in this new niche. As a result, the equity release market, along with other equity schemes like Equity Compensation or home reversion is becoming more and more active, and therefore tempting for investors.
There is no successful investment that hasn’t been carefully planned and studied, with a risk policy clearly defined and lots of math performed before any major decision. Before entering into a new segment of market, or offering a potential borrower any deffinitive quotation, investors study each case and calculate how much margin they could get out of the deal, what the risk is and what range of rate they could offer to the new customer.
They do have their own tools to do so, like a Margin Calculator or rate charts, which have been generated after years of studying the market. With these results and after enough consideration, they will take their decisions and choose where to put their money, and under which conditions.
Equity release calculators for borrowers
Even if the lender is technically the investor in the deal, when you borrow money under an equity release scheme you should be consdiering yourself as some kind of investor, too. As in, you must make the right choices so you make the most out of what you own. A great deal of this comes from choosing the right people to work with. The right lender who will offer the most convenient deal and the most reliable service, and the right advisor who will show you your options and wisely help you decide which one is best.
Another important element for you to take into consideration is the use of equity release calculators that are currently available for you online and for free. These tools help you have a first approach on how much you could release from your property, what range of rates you could expect, and how likely is your request to be approved. Also, equity release calculators help you compare the performance of different schemes, like home reversion, drawdown mortgages and lifetime mortgages.
Of course, you should never forget that the results you get at an equity release calculator do not guarantee your final quotation. You must ask different lenders to get a deffinitive answer about the terms of your deal.