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The primary definition of equity release can be explained as any loan that is taken against your home as security. While this is increasingly becoming a popular practice, it is always advisable to exercise caution while using this form of home equity loan as it may leave your beneficiaries with no inheritance if advised incorrectly. For example weigh your options for how to use your equity release for retirement such as being careful about how to use equity release for a holiday versus another purpose.

Ways to Use the Loan
Home equity loans are usually provided as an option to homeowners who want to use their property as collateral to get a lump sum of money against the value of their home. Since a home equity release lets the person have a set amount of money, most people who use this option generally use the money to pay off debts such as a mortgage, unsecured loans or overspending on credit cards.

Using equity release for debt consolidation can be considered to be a wise option as usually the interest rate on the equity release schemes are lower than the ridiculous interest penalties applied by the credit card companies, usually in excess of 20%. While many people use the equity release to pay off their debts, there are some who use equity release for a holiday too. Such people are looking for a lifestyle enhancement here. The opinion of these people is that when they have worked all their lives, they deserve a nice holiday with their loved ones to relax and recharge the batteries. These people take a release of equity in order to improve their lifestyle.

This has been the biggest growth area in the equity release marketplace as it is not a need fuelled by necessity, but one of aspiration. That one off luxury purchase is also something that most people look at using the equity release. This could be buying their dream car or going on an once-in-a-lifetime cruise which is becoming increasingly popular these days.

Another common use of equity release that is evident in today’s economic climate is to help the children. Parents usually opted for a home equity release to help their grandchildren with education or launch their career. Times have changed and rather than skipping a generation, the need has been driven back towards their children in helping them get onto the property ladder or keeping their business afloat.

Specifics of Equity Release Products
You know how you can use these products, but what is the process for attaining such a loan? How old do you need to be? Are there any disadvantages to these financial products?

These are questions that need answered if you want to obtain a product that works best for you. The first answer is that you need to find a mortgage company that deals in lifetime mortgages or equity releases for retirees. You can then look over their specific qualifications. One of these is being at least 55 years of age, where some companies may require you to be 65. As long as you are of age, you own your home or can use the lifetime mortgage to pay off the loan, and have good credit you can apply for this financial product.

Disadvantages to Lifetime Mortgages
The third question asked above needs its own heading. These are important notes to remember. First, if you use equity in your home by obtaining a loan you must repay the loan. The good news is the money is tax free and you do not owe a monthly payment. The interest can be paid in a monthly payment with an interest only lifetime mortgage, but otherwise the interest and principle balance is repaid upon death. It can also be repaid if you decide to sell the home and move to a new one or into a retirement community.

Depending on the amount you borrow you may reduce the size of inheritance or take it away completely.
A home equity release plan may seem to be an easy option but this money should be spent wisely. These forms of equity release mortgages which are arranged are usually advisable for retirees seeking for an easier and more comfortable retirement. There are several schemes that make equity release beneficial for people over the age of 55. This is the reason why pensioners are believed to be the biggest group of people who reap the benefits of home equity release plans even to use equity release for a holiday.