Equity release is still a relatively new concept for many people, which means we are often asked not only what it is, but also why someone would want to pursue it as an option.
The first of those questions is relatively easy to answer, whilst the second can have many solutions. Equity release is simply a way of freeing up some of the money that you have invested in your home. Normally available only to over-55s, it is primarily designed as a way to liquidise a portion of what is likely to be your main asset: your house. Think of it this way: if you had £500,000 invested in the bank, you would be able to take that money out as you pleased but if you have a £500,000 property, you cannot actually use any of that £500,000: it is very illiquid.
By releasing some of that money you can turn a portion of your home’s value into cash, which brings us to the second question: why would you want to do that?
For many people, equity release is a way of living a better retirement. You may have seen media coverage over the last few years highlighting the government’s efforts to get us all to save more for our post-work years. The state pension is not enough alone for many people, especially if we have plans, such as travelling abroad or generally living our dreams in the years after we finish working.
Whilst many of us are now preparing properly for retirement, what if you have made it to your well-deserved years off work without the funds you expected? What if you cannot enjoy the retirement you always dreamed of? For many people, equity release is the answer to this scenario: taking money that they have spent years investing into their property and freeing it up to do any number of things with.
Aside from freeing up cash to spend on yourself in retirement, equity release has been used by many people for other purposes. Increasingly, as the housing market continues to be competitive, older relatives have helped younger members of the family to access the property ladder. Similarly, equity release can be an option when planning to provide an inheritance. No one likes to consider the worst but if you do need long term care later in your life then equity release can be used to make sure that you can afford it.
The options for receiving the money you release can be tailored to your circumstances. If you are taking equity release to provide or supplement a pension then you may well want it to provide a regular income. This is a common option which many people take and one that can be assured for the rest of your life, depending on the equity release option taken. If you are using equity release for a specific purchase, or to pass on to children or grandchildren, then the money could be provided as a lump sum, available to use quickly, as intended.
Whatever the reasons for using equity release, it is a solution which is best provided using comprehensive and impartial advice. Not only will we be able to secure you the best equity release solution available but we will also be able to check that equity release is the best solution for your situation, and one that would see you receive the kind of return that you are expecting. If you have any queries regarding equity release, or are already considering it as a solution, then please do feel free to get in touch and we will be happy to talk through your options.
THINK CAREFULLY BEFORE SECURING OTHER DEBT AGAINST YOUR PROPERTY.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.