Equity sharing agreement vs. home equity loan vs. reverse mortgage: what to consider
When it comes to making the decision of whether to get an equity sharing agreement, home equity loan or reverse mortgage, there are a few key considerations to take into account. Here we will outline what you need to think about before making your choice.
Your current financial situation
Before making any decision about which route to go down, you need to take a look at your current financial situation. This means looking at things like your income, your outgoings, your debts and your assets. This will give you a good idea of whether you can afford to take on any additional debt, and if so, how much you can afford to borrow.
Your future plans
It’s also important to think about your future plans when making a decision about equity sharing, home equity loans or reverse mortgages. For example, if you’re planning on selling your property in the near future, then an equity sharing agreement may not be the best option for you. On the other hand, if you’re hoping to stay in your property for the long term, then a reverse mortgage could be a good option to consider.
The terms of the agreement/loan
Another key consideration is the terms of the agreement or loan. For example, with an equity sharing agreement, you will need to agree to share any future increase in the value of your property with the other party. With a home equity loan, you will need to repay the loan plus interest over a set period of time. And with a reverse mortgage, you won’t have to make any repayments until you sell or move out of your property.
The risks involved
Finally, it’s important to think about the risks involved with each option. For example, with an equity sharing agreement, you’re taking on the risk that the value of your property may not increase. With a home equity loan, you’re taking on the risk that you may not be able to keep up with the repayments. And with a reverse mortgage, you’re taking on the risk that you may not be able to stay in your property for the rest of your life.