Equity Release - Can it Be Used As a way of Bridging Finance?Posted by Horowitz Snedker on May 19th, 2021 The industry definition of an equity release scheme can be an over 55's mortgage, albeit without monthly repayments & finally settled on death or moving into long term care. It really is now becoming more apparent that whereas equity release was once considered an eternity mortgage, people 'temporarily' have the opportunity to take advantage of among providers' shortcomings in its plan features. As equity release has been made to run for the rest of the person's life, lenders have always seeked to include potentially heavy early repayment charges, should the scheme be redeemed early. This penalty could possibly be either from the change in government gilt rates, expire after a set period of time or once we shall discuss; from the Bank of England base rate. It is this feature which has provided a window of opportunity should people over 55 require short term borrowing facilities. Experience has recently shown that retired clients are now struggling in retirement; income from investments has fallen, annuity rates aren't favourable & pensions are falling in popularity with more reliance on fund performance & contributions than defined benefit schemes. Increasingly more debt can be evident in this generation & control of finances is becoming more difficult to manage in the present economic climate, bank cards & loans seeming the preferred choice. Nevertheless, there are options available that may resolve these issues - in your free time work is becoming more apparent to increase retired incomes. Better management of debts & more consumer information being available because the silver surfers become more online savvy. Advice on the suitability of equity release schemes will primarily discuss all these options & more. Should none of the alternatives be suitable from the client's perspective, then at this time, equity release can be considered as a last resort. However, another one of these options would be downsizing. This might involve the emotive issue of selling a property that could have been a family group dwelling for a generation. However, in order to improve the necessary funds required this can be the correct solution. Unfortunately, this option might not provide an immediate resolution. House sales are eventually starting to rise, financial firms marginal at present & for somebody who requires funds as soon as possible, today's marketplace could prove an obstacle. But all is not lost - & that's where a temporary bridging facility can be acquired & can be supplied by a current equity release provider. At the mercy of eligibility, the Prudential's equity release schemes can meet this objective. By releasing equity now with Prudential you'd be profiting from their link with the Bank of England base rate & early repayment charges. In conclusion, the Prudential equity release schemes is only going to levy a penalty should the Bank of England base rate fall from inception to enough time of repayment. With Express Finance London 2021 at an unprecedented low rate of only currently 0.5%, it really is highly unlikely (however, not impossible) that the rate will be lower than 0.5% in the foreseeable future. It can therefore be safely assumed that when either of the Prudential's equity release plans are taken out, whether their single lump sum product or innovative increasing cash reserve plan, NO early repayment charge would apply. Therefore, this can be very good news therefore for people who have debt issues or need usage of short term funds & not need it affect their tight budgetary constraints. Without monthly repayments required, clients can boost funds this year & following a 12 month period could repay in full or partially, with just a deeds release fee of �105 being levied. This may tie in conveniently with the house market improving around this time frame. With Prudential's interest levels currently only 6.3%, this is a fantastic time to consider this form of borrowing for eligible people over age 55. So as the Bank of England base rates remains at just 0.5% it might be advisable to consider the Prudential plan as a way of short term borrowing or bridging finance, based on requirements. The Prudential's Increasing Cash Reserve plan includes a free valuation & �300 cashback on completion until 31st December 2009. So all's not so gloomy in the equity release market as some would suggest.Like it? Share it! More by this author |