Home equity is the amount of money someone has invested in their home - your home equity may be all or part of the market value of the property and its fittings. A home equity release loan is a loan which uses the equity you have in your home as security. In general, no repayments are made until you sell the house or die.
Home equity release agreements may be entered into by older people who do not have a large income, but have a lot of money invested in their house.
Home equity release may be right for your situation, but it needs very careful consideration. There are no specific legal requirements for how a home equity release plan must be made, over and above the laws applicable to financial or property transactions more generally (e.g. the Consumer Guarantees Act and the Credit Contracts and Consumer Finance Act). A well structured plan will mean that you don't end up being evicted, moving to another property, or owing money to the lender above the value of the house.
Signing on for a home equity release plan is a very big decision, but there are several places where you can get advice. Sorted.org.nz offers a useful online guide to equity release.
There is also an organisation called SHERPA (Safe Home Equity Release Plans Associated) that is a governing body for the organisations offering home equity release loans. Its members operate under a shared code of practice.
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