Are you looking to start a business? Expand or renovate your home? Do you have financial obligations to meet? Your outlet is right over your head- That’s right, your house!!! If you’re a homeowner, you have probably seen the value in your home increase over time. Equity release allows you to tap into some of this value and release a cash sum.

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This is a great option for people who own their own homes outright but wish to borrow on a long term basis using their home as collateral to expand their business, undertake home improvements / expansion, pay overseas school fees etc.  No down payment is required for this type of mortgage.  Furthermore, all fees and charges can be capitalized (added to the loan) to make it easier for the borrower.

The bank or mortgage house will advance, averagely between 60%- 80% of the value of your property and will spread the repayment over 10-15 years. However, you might not get the entire 60% or 80% depending on your income. Yes, you have to be earning some form of income to qualify for equity release in Ghana. Below is a typical eligibility criteria for one of the mortgage houses in Ghana:

 

  1. Property must be residential

 

  1. Applicant must pay off the loan before their 60th birthday

 

  1. Applicant must demonstrate valid ownership of the property (in the form of land title certificate or fully registered indenture)

 

  1. Use of funds must be acceptable to the mortgage company (Not for illegal purposes).

 

  1. Loan period typically ranges from 10 years for cedi loans and 15 years for dollar loans.

 

I would be remiss however, if I do not inform you of the risk and disadvantages associated with equity release:

You may end up losing your home in the process.In the event that you default on repayment or you find it difficult to meet your repayment obligations, your property will be sold and the mortgage house will take their money out of that amount. Even though the balance will be given to you, your children or grandchildren may have lost their inheritance..

Additionally, there is an age limit to this, so not every home owner can benefit from this.

If you are a prospective home owner, you may benefit from equity release in future with the right amount of planning. Knowledge is power my friends. The Time to own a home is NOW!!!

 

Written by: Daphne Amarkai Quayson

Sales and Marketing Officer, Emerald Properties.

 

 

 

This article was first published in the May 19, 2016 edition of the Business Finder Newspaper.

Equity release demystified
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