What is SHIP and how does it help protect my Equity Release Mortgage?

What is SHIP and how does it help protect my Equity Release Mortgage?

Equity release is one of the most popular means by which retiring people seek to increase the income from their pension funds. If you are currently contemplating taking on this kind of scheme, it is a good idea to understand a few of its fundamental features.

Equity release is a means by which to access the capital that may be tied up in your most valuable assets. Invariably, plans of this type allow you to take out a loan that is calculated using the value of your property. Unlike conventional loans, you are not required to repay the full amount, either in a lump sum or in instalments.

This is because equity release schemes are designed to run beyond your lifetime. Once the policy closes, your house will be sold and the debt repaid using the money from this transaction. While in many ways this seems an ideal solution to the problem of income during retirement, it is important to remember that there are pitfalls. For example, you will want to ensure that the policy you take out includes a no negative equity guarantee policy.

This will guard against the risk of saddling your children or family with un-payable debts in the future. In addition, you should also try to select a service provider which is an authorised member of SHIP; companies of this kind are dedicated to serving you as the borrower, and will ensure that you are never evicted or landed with financial obligations you cannot meet.

Equity release is a useful means by which to ensure that your income remains healthy during your years in retirement. However, you will want to make sure that the service provider you choose is committed to serving your interests before you jump into any quick decisions.

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