Published on: 21 January 2021
Last Updated on: 24 December 2024
Although it seems like equity release plans have been around forever, this sector of finance has only been regulated since 2004. However, this has not dented their popularity among over 55s wishing to free up a sum of money rather than leaving it tied up in their property.
Many have used the money to fund home DIY projects, help a child onto the housing ladder, or simply for a blowout holiday or new car. Increasingly though many are seeing equity release as a good way to pay for care in their own home in old age. Equity is the value of your home minus any loans or mortgages secured against it which haven’t been fully paid off.
If you’re wondering whether this would be right for you read our advice on the advantages and pitfalls of equity release and how the equity in your home could pay for a comfortable old age.
What is Equity Release and How Does it Work?
This is a method for releasing some of the untapped wealth tied up in your home. Being able to unlock the value of your home and turn this into cash is a way to remain in a much-loved family home. There are two main types of equity release – a lifetime mortgage or a home reversion plan, which is the sale of part or all of the property.
A lifetime mortgage is a loan against the value of your home which is not repaid until either the homeowner dies or goes into long-term care, or the property is sold. If you decide to go down this route you must choose carefully between the two types of lifetime mortgage which are:
The interest roll-up mortgage, which is the most popular option. With this, you receive either a lump sum or regular amounts, and interest is added to the loan at a fixed or capped rate.
An interest-paying mortgage is similar to a standard mortgage in that you pay monthly or ad-hoc payments, and some plans allow you to pay off the capital, to reduce the sum owed at the end.
The home reversion plan is only available to those aged at least 65. With this, you can sell all or a percentage of your home to a provider at below the market value and you become a rent-free tenant in your home. You can even sell percentages of the home at off-set intervals.
Another, less well known and potentially more risky option is the sale and rent back scheme where you sell your home, at a discount and become a rent-paying tenant in your home.
Points to Consider
Home care services are increasingly seen as preferable to standard nursing home care for many reasons, not least among them being able to carry on living in your own home being looked after by a trusted live-in carer who becomes your friend.
Lifetime mortgages are considered the most popular option for equity release because it allows you to retain full ownership of your property and some come with an option of paying back some of the loans over time in order to reduce the build-up of interest and retain as much of the value of your property to benefit your estate when you die.
You can only apply for equity release once you are over 55 and the amount you receive is dependent upon the value of your home (minimum value £70,000) as well as your age. Your property must be in the UK.
Benefits of Equity Release
For today’s older homeowners who have seen the value of their homes rise significantly over recent years and with the added benefit of current low-interest rates, equity release gives you an amount of cash to spend now or to put towards a live-in care plan.
Risks and Pitfalls of Equity Release
The biggest problem with equity release is that you do not receive the full market value for your home, indeed the amount you can access would be much less than you would get by selling your home on the open market in the traditional way. Another disadvantage is that any inheritance your beneficiaries expect to receive would be reduced.
The upfront costs and fees involved in setting up an equity release plan could be as much as £3000.
If you opt for a lifetime mortgage there is a real risk that when the time comes for your home to be sold the amount owed may be more than you borrowed because of the compound interest charged on the mortgage, unless you can pay off some of the debt as you go along. So, if you want to leave a decent inheritance for your family you need to act with caution.
Be aware that if you have a substantial amount of cash in the bank this could affect any means-tested benefits you may be entitled to. The upper threshold is currently £16,000 so above this you are ineligible for means-tested benefits. Your tax situation could be impacted.
If you choose to pay off the whole of the lifetime mortgage early you could incur penalties.
Risks of Home Reversion Scheme
You may only receive between 30-60% of the market value of your home and there may be a clause in your contract which forbids you from moving home. Distressingly, once you die the property usually has to be vacated within one month which causes unnecessary upset to the family at a distressing time.
Protections from the Equity Release Council
You should look for an equity release provider who is a member of the Equity Release Council to ensure that any lifetime mortgage you take out will never exceed the total value of your property. You are also assured that:
You can remain in your home until the end of the mortgage term
You are provided with an independent solicitor who explains everything clearly to you
Interest rates must be fixed or capped and the product must have a ‘no negative equity guarantee'.
Always get the best independent adviser who is regulated by the FCA and discuss things with your family before signing on the dotted line.
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Student loans can be helpful. You take out a loan to enroll in higher education, which can land you in better job opportunities, increasing your income. But of course, it can be a bit tough to save while you repay your student loans.
Regardless, there are ways to save yourself from student loans, especially if you can manage the interest loans and pay more than the minimum. Here are effective ways to save yourself from student loans and pursue your dream job.
1. Pay Off Your Student Debt Faster
The easiest way to get rid of your student loans is to pay faster. If you can, send massive payments to your loan servicer every month and do so ahead of schedule.
Another method is to make half payments every two weeks instead of the full monthly payment. When that happens, you send the equivalent of an additional payment every year.
Of course, you may not have the discretionary income to make the extra payments. However, you can get a side job and earn extra income on the side to increase your income. You have the power to do so.
Here’s a little bit of motivation: consider how increasing your monthly or weekly payments can help you become debt-free faster. You can even save interest costs on top of that. You can use a student loan repayment calculator to show you how the smallest payments affect your student loans.
2. Find Out The Type Of Student Loans You Have
It's essential to know the type of student loans you have and develop a repayment plan that helps you. If you have federal student loans, visit the National Student Loan Data System. You can check your student loans there.
There are four broad categories of student loans: graduated, standard, extended, or income-driven repayment. Let’s go through them.
Standard plan:
Your loan servicer will divide the total amount of money you owe with the standard plan and spread it over ten years. If you pay the same amount for the next ten years, you'll finish paying your student loans.
Graduated plan:
Just like the standard plan, this plan lasts for ten years. However, you start your monthly payments by paying less. Your payment for each month increases every two years. This option is ideal for borrowers who are sure that their income will increase in the future.
Extended plan:
With this plan, you pay a lower amount over a long period.
Income-driven repayment (IDR) plan:
The IDR plan lets you pay off your student loans for the next 20 or 25 years, depending on your chosen plan. But the payments will always be what you can manage every month. After 20 or 25 years, any amount you haven't paid yet will be forgiven. If you choose this plan, you'll have to certify your income annually.
There are limited private student loan forgiveness options available for student loans. You’ll have to call your loan servicer to find out any available options for you.
3. Make Extra Payments, But Do It The Right Way
There's no penalty whatsoever when you pay more than the minimum or pay your student loans early. However, the prepayment comes with a caveat: loan lenders may apply the additional amount to the next month's payment.
When the student loan servicers do that, it pushes your due date forward, but it won't help pay off your student loans faster. What you need to do is to instruct your lender, either through the mail, phone, or online, to apply any extra payments to your current balance. In addition, remind them to keep next month's due date the same.
You can make additional payments any time in the month. Another way is to make a lump-sum loan payment on the due date. Whichever you choose, you can save lots of money.
4. Refinance If You Have Good Credit And A Good Job
Refinancing your student loans can help you get rid of your loan debts faster, and you don’t have to make additional payments. When you refinance, it replaces several student loans with one private loan, usually at a lower interest rate.
If you want to make faster repayments, choose a new loan term that’s less compared to what you have left in your current student loans. Going in for a shorter loan term may increase your payments each month.
However, it’ll help you clear off your student loans faster and save money on interest.
Final Thoughts
The strategies explained above can help you pay back your student loans and save money. But not all the repayment methods can help you do that.
Some repayments are designed to help you manage your debts, such as income-based repayment plans. These plans can help you clear off your debt on time and in full. Now, even though it can help you today, you'll end up paying more money in interest charges over your loan life.
It is worth mentioning, some educational institutes like Navient were forced to close due to fraudulent activities. These institutions are to compensate students who are affected. Check to see if you apply to these compensations
If you don’t have a clear solution, you may need to talk to a student loan expert.
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At its core, an NFT (Non-Fungible Token) is a digital asset that represents ownership or proof of authenticity of a unique item or piece of content, often an artwork, using blockchain technology.
Unlike cryptocurrencies such as Bitcoin, NFTs are not interchangeable; each NFT has a distinct digital signature, making it unique and non-fungible.
NFT art refers to digital artworks bought, sold, and traded as NFTs. These can range from digital paintings, animations, music, videos, and more. The art is usually digital, but the NFTs can also represent ownership of physical artwork.
How Does NFT Art Work?
Creation and Minting: Artists create digital art and then "mint" these works as NFTs on various platforms or blockchains like Ethereum. Minting involves creating a new block, validating information, and recording the art as a transaction in the blockchain.
Ownership and Authenticity: Once minted, the NFT's metadata (including the artist's signature, the artwork's details, and ownership history) is securely stored in the blockchain. This ensures the authenticity and provenance of the artwork, making it easy to verify its originality and ownership.
Buying and Selling: NFT art can be purchased on numerous online marketplaces. Transactions are usually made using cryptocurrencies. When an NFT is bought, the ownership is transferred to the buyer, and this transaction is recorded on the blockchain, providing a permanent record of the sale.
Royalties: One of the revolutionary aspects of NFTs is the ability for artists to receive royalties automatically. Artists can program in a royalty system to receive a percentage of sales whenever their art is sold to a new owner.
Benefits of NFT Art
Provenance and Authenticity: NFTs provide a secure and transparent way to prove the authenticity and ownership of artwork.
Global Market Access: Artists can reach a global audience, and buyers can purchase from anywhere.
Royalties: Artists can benefit financially from secondary sales of their work.
Innovative Art Forms: NFTs have encouraged new digital art and creativity forms.
Criticisms and Challenges
Environmental Concerns: The energy consumption of blockchain technology and NFT transactions has raised environmental concerns.
Market Volatility: The NFT market can be volatile, with prices fluctuating dramatically.
Copyright and Plagiarism Issues: There have been instances of art being tokenized without the creator's permission.
Future of NFT Art
The world of NFT art is still in its infancy, and its potential is vast. As technology evolves and more artists and collectors embrace NFTs, we may see new forms of art, innovative uses, and solutions to current challenges. Despite the controversies and growing pains, NFT art is paving the way for a new digital creativity and ownership era.
NFT art represents a significant shift in how we perceive and handle digital ownership and art. By leveraging blockchain technology, NFTs provide a secure and transparent method to buy, sell, and collect digital art.
While there are challenges to address, the NFT space's potential for growth and innovation is immense, making it an exciting frontier in the art world. As with any emerging technology, artists, collectors, and enthusiasts need to stay informed and engaged with the evolving landscape of NFT art.
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Gold and silver bullion investments are an appealing way for investors to diversify their portfolios, while still carrying some risks. Bullion prices often fluctuate and potential risks should be carefully evaluated.
Bullion is an investment-grade precious metal purchased and traded primarily for its intrinsic value, taking various forms such as bars, ingots, and coins.
How to Purchase
When purchasing bullion, your first step should be finding a trusted precious metals dealer. Your chosen dealer should be licensed to sell what you're after while having a great track record for customer service and offering competitive pricing. You can visit this site for more information about licensing.
Once you've identified several dealers, compare prices to ensure that you find the best possible deals before taking into account additional expenses like shipping and insurance costs for an accurate picture of how much your purchase will cost in total.
Bullion can take many different forms, so you need to decide the appropriate form for your investment goals. Coins and bars are popular options because they have low premiums over spot prices and can easily be stored.
Bars also provide an effective way of investing in large quantities at once. No matter which form you opt for, your bullion should always remain in mint condition as investors will pay more for pieces without scratches or extensive tarnishing.
Your metals may be vulnerable to natural hazards like fire and flood as well as theft if stored at home, so if this is your choice then make sure it is stored in an approved, fireproof safe.
Bank safety deposit boxes offer another form of home storage; however, these depositories are only accessible during banking hours and may not offer protection from disaster or theft. Furthermore, their contents could be disclosed under Patriot Act rules. You can click the link: https://www.congress.gov/ for more information.
One alternative to keeping your bullion safe at home is using a reliable bullion vault storage service where storage services are secured with non-bank depository banking and cost less than private safes.
How to Store
Bullion bars and coins provide a safe way of investing your wealth but must be stored carefully so as not to suffer damage or tarnish. Bullion dealers will often offer premium pricing on well-preserved bullion as it becomes more desirable among their buyers.
Home storage of bullion is often the safest, most private way to safeguard gold, silver, and other precious metals - although this requires investing in a safe or vault and additional security measures such as cameras or alarms.
Bank storage of bullion may also be an option, though this has privacy-related disadvantages.
Safety deposit boxes at banks aren't insured against seizure by government agencies or creditors, plus staff must report what's inside your safe deposit box, potentially opening you up to identity theft risks. You could add riders onto your homeowner's policy that cover bullion but this also comes at a privacy cost.
Utilizing professional bullion storage services is another alternative option. Many storage providers offer allocated storage, meaning your metal will remain physically separate from other customers' metals and does not appear on their balance sheet. When you request its return, you will receive exactly the same metal you deposited initially.
Handle your bars or coins carefully when dealing with them - never mix pristine and tarnished metals together as this could damage their value and reduce their worth. Always clean your hands prior to touching either a coin or bar and use hand sanitizers if necessary; lay out a soft towel or cloth beneath them just in case you drop them, and refrain from speaking over or breathing over them as this could harm their integrity.
Self-storage facilities may be ideal for those who prefer hands-off storage solutions, as they typically charge lower monthly fees than bank vaults while still being secure and closely monitored.
How to Use
Precious metals are popular investments because they're considered "hard assets."
Unlike stocks, bonds, cryptocurrency tokens, or non-fungible tokens (NFTs), bullion is tangible and can be held directly. Not only does its value tend to hold steady over the long haul but it can even increase!
Bullion can serve as a valuable hedge against inflation and other financial market risks and is usually stamped with its weight and percentage of precious metal content or purity to enable investors to accurately determine its current market value.
Gold and silver bullion is traded globally on major markets. Investors can purchase physical precious metals directly through online dealers or exchange-traded funds (ETFs) that track the spot prices of gold and silver.
Bullion can be difficult to pin down since its definition can vary depending on who's using the term and their understanding of it. Bullion refers to items valued for their precious metal content rather than any form of government backing or backing from external entities.
Coins, rounds, and bars that meet the high purity standards needed for investment purposes may qualify. But the term can also refer to more common U.S. coins like pre-1965 90% silver eagles which often sell at relatively low premiums over their spot price.
Collectors and investors seeking to distinguish among different forms of bullion can find it invaluable to distinguish among their options. The more refined and pure the piece of metal is, the higher its premium will be over its spot price; therefore investors tend to seek high-purity bullion from reliable dealers.
How to Invest
Bullion investments can be an intelligent strategy for individuals looking to diversify their portfolios. But before buying any precious metals, it is crucially important that you understand their valuations and your responsibilities before proceeding with purchases.
Bullion, or a pure form of precious metals like gold and silver, is often sold through precious metal dealers both online and at physical shops, where you can have them delivered or stored for you at a fee. Investors frequently use bullion as a hedge against inflationary events that create economic uncertainty that drive prices higher for precious metals like bullion.
Traditional investors typically purchase physical gold and silver coins and bars stamped with their weight and purity. You can visit InvestingInGold.com to learn more about the process of buying physical precious metals for your investment portfolio. It is essential to research any company you are considering working with in order to ensure they are reputable.
Investing in gold and silver may seem intimidating to some investors; however, these individuals can still reap its benefits by purchasing ETFs that track its price movements; these funds can then be easily traded as opposed to physical ownership of bullion.
Importantly, unlike stocks, bullion does not generate dividends and capital appreciation; however, some individuals may find its volatility attractive as it protects savings against larger losses during recessions and other economic difficulties.
Many new precious metal investors may feel intimidated by specialized terminology like bullion. Before making any definitive decisions regarding bullion investments, it is vitally important to research spot prices, compare dealers, and research different products available before deciding how much bullion to purchase.
You want enough bullion invested to see significant returns when prices increase but not so much that its value drops significantly when prices decrease. This is why many experts recommend investing ten percent of your retirement savings in alternative investments, such as precious metals.
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This is a method for releasing some of the untapped wealth tied up in your home. Being able to unlock the value of your home and turn this into cash is a way to remain in a much-loved family home. There are two main types of equity release – a lifetime mortgage or a home reversion plan, which is the sale of part or all of the property.
A lifetime mortgage is a loan against the value of your home which is not repaid until either the homeowner dies or goes into long-term care, or the property is sold. If you decide to go down this route you must choose carefully between the two types of lifetime mortgage which are:
For today’s older homeowners who have seen the value of their homes rise significantly over recent years and with the added benefit of current low-interest rates, equity release gives you an amount of cash to spend now or to put towards a live-in care plan.
