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Mortgage equity withdrawal
(Redirected from Equity release)MEW stands for Mortgage Equity Withdrawal. It is also known by the term Equity Release. It means cashing in on the locked up equity in your home.
For example if you bought a house for £100,000 and over the years the market price of your property increased to £150,000 then you would have equity in your house of £50,000. This does not take into account any mortgage repayments and any deposit that you intially put down on the purchase.
With record low interest rates levels and booming house prices, credit has become cheap and people have rushed in their masses to withdraw equity from their homes. They have seen how little extra their mortgage payments are after they have withdrawn their equity and used their homes as cash machines. Sometime not just once but twice or more as they have seen the value of their home increase.
What people fail to realise if that debt is debt and needs to be paid back. It may seem cheap at todays low interest rates but interest rates can and do change, therefore in times when interest rates are higher the increase in debt is going to be harder to service.
Instead of MEWing to for materialistic ends, what people should have been doing in this period of low interest rates is overpaying on their mortgage to pay it back earlier. Not only would this save themselves thousands of pounds, in interest payments, over the length of their mortgage agreement but it would also unlock them from the biggest financial burden in most peoples lives and maybe allow them to save for a pension and thus stop working and concentrate on other things that they want to do with their lives.