With house prices remaining high, many older people have tens of thousands of pounds locked up in their properties. For those who reach retirement and find living on their pension a financial struggle, equity release could provide a way to benefit from the value, the equity, they have in their property.
For many, the thought of downsizing in later life would represent a step too far; by contrast, equity release allows you to stay in your own home and familiar surroundings, whilst at the same time accessing and enjoying the wealth you have tied up in it.
Lifetime Mortgages, a form of equity release, have become an increasingly-popular way of supplementing retirement income, paying down debts, carrying out home improvements or passing capital on to younger generations.
A Lifetime Mortgage with a drawdown facility, allows you to take the cash in stages. This can be beneficial as it gives you the flexibility to tap into funds as and when you need them and interest is only charged on funds when they are drawn down.
There are several different types of equity release plan available to those aged over 55, and it’s vital to get bespoke professional advice before embarking on this course of action as these schemes can be expensive and inflexible. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so it’s important to discuss your plans with your family and dependants from the outset.
Think carefully before securing other debts against your home. Equity released from your home will be secured against it.