The COVID-19 pandemic has influenced practically every aspect of contemporary life, with ramifications that extend far beyond the virus's substantial human cost. Businesses in many sectors have been heavily impacted, with many companies seeing changes that may or may not be permanent.Financial security has become a top goal for many in these unpredictable and stressful times, as seen by changes in the stock release market. It's a market that, like most, has been hit by the coronavirus.Jason Stubbs, an Equity Release expert, discusses the research found by looking at equity release by Aviva and how COVID-19 shifted the equity release industry.
What's Equity Release?
Equity release is a financial instrument that enables UK-based homeowners over 55 to access the equity in their principal dwelling. Furthermore, these plans allow homeowners to live on the land for the rest of their lives.
How Does Equity Release Work?
The bank releases tax-free cash to the homeowner in exchange for the property serving as security for the loan.While you can return up to 10% of the equity and monthly interest, you can also let the interest grow, and the whole sum is resolved when you die or go into long-term care. As a result, no affordability checks are necessary.
Who Are Aviva?
Aviva is a multinational insurance company with operations in 16 countries. They are situated in the United Kingdom, with headquarters in London, and they serve approximately 33 million customers.They are not only one of the largest general insurers in the United Kingdom, but they are also one of the country's primary life insurance and pensions providers. Their insurance products include auto, house, life, and health insurance.
How COVID-19 Shifted the Equity Release Industry
During the pandemic, Equity release became more popular as retirement periods lengthened and individuals sought to stay in their houses.With the lockdown lifting, more and more homeowners are using equity release as a means to book vacations, make home upgrades, and plan weddings, while more and more individuals are looking for a way to fund everything the pandemic has halted. The market has since transformed with greater flexibility, choice, competitive rates, and product innovation for every individual in recent years.
Is Now a Good Time to Consider Releasing Equity?
Before the pandemic, equity release was fast gaining popularity, providing many individuals with the option to unlock the value in their houses to give extra income without selling their property.Making home upgrades, taking a particular vacation, assisting a family member onto the housing ladder, or giving more income for a more comfortable retirement are common reasons for releasing equity.In the present circumstances, you may be considering equity release as a solution if the epidemic harms your finances or the finances of a friend or family member you want to help. Alternatively, the crisis may have caused you to reconsider your life goals, and you may now be creating financial plans and initiatives for when life returns to ‘normal.'
Equity Release: What Has Changed?
- The maximum equity you may access is still 90% of the property value, but this is now case-by-case and more difficult to qualify for. Lenders like to lend up to 80% of the property value for cash-out (equity release).
- Some lenders are no longer allowing self-employed borrowers to receive cash out. There are still lenders who do.
- Although the unlimited cash-out sum is still accessible, please keep in mind that some lenders still have limits.
- Lenders are closely scrutinising/verifying the borrower's income and employment to ensure solid and continuous. Banks, for example, like to see pay stubs that are no more than 14 days old when you submit your application. Some employers also demand a cover letter.
- Lenders' response times have increased, with some needing up to 20-30 business days only to pre-approve your application, while others remain unaffected. So, if you want quick cash-out refinancing, applying with the correct lender is critical.
To Conclude
Before deciding, investigate all of the best equity release plan providers and consult with your valued loved ones. While equity release requires a significant time commitment, it has the potential to be life-changing if done right.