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How Fintech is Entering the Equity Release Market

By April 20, 2022Guest Post

We all focus our efforts and money on affording a real estate property that we can call home. But after turning 55, your sacrifices can pay you back in more ways than you would expect – especially if you hold equity in your property!

Equity release is becoming an increasingly popular option for people looking to build long-term wealth, clear debts, or afford a major investment. And, fintech is making this option more accessible, customizable, and straightforward than ever. Here’s how. 

What is Equity Release?

For most people, getting up the property ladder, living mortgage-free, and owning their own family home are important life goals to achieve before retirement. And, undeniably, real estate investments are robust foundations needed for long-term wealth!

And yet, houses are non-liquid assets, meaning that accessing the equity – or cash value – tied to a property might not always be fast, convenient, or straightforward.

Equity release solutions are financial products that allow homeowners over 55 to access the equity built up in their homes and receive a tax-free lump sum. 

Unlocking the build-up value of a real estate property through equity release allows a homeowner to continue living in their home, maintain 100% of their ownership, and access a no-monthly-repayment option.

Because of this, this financial move is becoming the go-to option to clear out debt, help a family member, or make a major investment.

At the same time, it’s important to understand that equity release options – like Lifetime Mortgages and Home Reversions – carry significant risks that might affect your long-term financial stability.

That is why it’s important to partner with equity release experts who can help you minimize risks and find a solution that matches your financial goals. 

How Fintech is Revolutionizing the World of Equity Release

Similarly to other financial products, equity releases are traditionally considered lengthy, cumbersome processes. And, today, it can take an average of 12 weeks for an application to be processed! 

Luckily, new fintech solutions have finally started to seep through this financial aspect, making it easier for homeowners to free up funds, access options online, and bypass the bureaucratic processes often associated with complex financial moves. 

Here’s how the equity release landscape is changing thanks to fintech solutions. 

User-Friendly Equity Release Platforms

Equity release solutions have traditionally been managed by lending institutions, which are in charge of the property valuation process and responsible for making a mortgage offer.

Fintech solutions like new home equity release platforms make the process far more user-friendly and entirely manageable for the end-user. 

Home equity investments allow households to free up cash with no monthly repayments, and the gains or losses from the property’s changes in values will be shared between the lender and the homeowner (when deciding to sell).

Immediate Cash From Non-Liquid Assets

In today’s economic climate, investors are looking for robust, long-term investments that allow them to build wealth over time. And, undoubtedly, real estate assets should be well-represented in any portfolio. 

But there is a significant risk with investing in real estate: liquidity. As the market changes, you might not be able to sell when you need to – or as quickly as you need to! Fintech home equity release platforms are an alternative to free up cash in no time by selling shares of the build-up home equity to an investor. 

In some cases, such as if you need cash to repay your debt or make a time-sensitive investment, cash availability can make a difference in your ability to pursue your long-term financial strategy.

Customisation and Flexibility of Equity Release Options

No matter your financial situation, managing your money, clearing your debt, and being in control of your finances are the pillars of long-term financial stability – especially after retirement. 

Fintech self-service systems allow homeowners to configure each aspect of a home equity release solution, so as to maintain ownership of a valuable asset like a home can be while also making the most of build-up value. 

What’s more, today’s fintech equity release options integrate with a wealth of third-party applications – including Experian – that streamline the entire application, carry out automatic credit checks, speed up the valuation process, and allow users to receive funds timely and transparently.

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