Is Equity Release Right For Me?

Telltale Signs That Equity Release is Right For You

Are you considering equity release, but you're unsure whether it's a great idea or a grave mistake? We've got the answers you've been looking for right here...

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Is Equity Release the Right Thing for Me?

Releasing equity is a big decision and you want to be sure that you’ll have no regrets in the future!

Did you know that more than half of all homeowners in the UK are over 50? Being part of this fortunate group gives you more financial options.

Equity Release is growing in popularity in the UK, allowing more and more people to unlock money that is tied up in their home without having to sell or down-scale.

Does this sound too good to be true?

Find out precisely…

  • Why equity release is a great way to boost your retirement.
  • What all the benefits are.
  • What the potentially negative aspects are and if there’s a way to navigate past them.
  • If equity release is right for you and your circumstances.

We’ve taken a very close look at equity release by reviewing over 200 plans and analysed all the pros and cons. Did you know that someone in the UK takes out equity release every 12 minutes?

Will you be joining them? Let’s take a look!

Here’s What You Need to Know

If you’d like to check out our video which summarises the most important points of equity release, then simply click the link below:

6 Pros of Equity Release

There is absolutely no doubt that equity release has amazing benefits. Here they are:

No tax on equity release

Because equity release is seen as a loan and not income, it’s not taxed. This saves you a lot of money.

It’s Easy

Your financial advisor will do most of the administration for you, making this a very convenient way to access large sums of money for those who are older than 55.

You also get to choose how you’d like to receive the money:

  • A lump sum – Ideal for big-ticket items.
  • Into a drawdown facility – To release cash when you need it. You’ll only pay interest on the funds you withdraw from the facility. With this option, you can also take out an original lump sum.
  • A monthly salary – Best if you’re using your equity release to fund your retirement.

Stay In the Comfort of Your Own Home

That’s right! You (and your partner) do not need to move to a new house (a very stressful event indeed), but get to stay in your home; the home you love.

According to the American Psychological Association1, selling your home and moving to a new place can be emotionally and physically draining, especially for older folks.

With an equity release loan, you can stay there until you pass away or need to move to a permanent care facility. You even have the option of using the funds to provide in-house care if needed.

How do People Spend their Equity Release Money?

  • Your family will never have to pay in

Even if the value of your property decreases, any additional equity release debt will be written off and your family will never have to pay in.

According to the Equity Release Council’s laws, you will never go into negative equity. This means your family will never have to pay more than the sale value of the home when the plan ends.

  • You don’t have to make monthly payments

This is such a financial relief for most people. After you’ve received funds from your equity release, you don’t have to pay it back unless you choose to. The loan and the interest will be paid back once your house is sold.

If you do choose to make payments, it will have a positive impact on the compounding interest and will mean that more money will be left to your family.

  • You can leave a portion of the value of your house to your family

You can guarantee that a portion of the value of your home gets passed onto your family if you choose to. Certain providers will allow for this and it is a comforting factor.

It will, however, affect the interest rate and the amount of equity you’d be able to release.

4 Disadvantages of Equity Release You Need to Consider

  • There are costs involved

The costs vary depending on the plan and the financial planner. They range from about £1500 to £3000. The good news is they can be paid from the equity that is released.

  • Equity release could make remortgaging difficult

Releasing equity could mean that you’ll have charges against your property, making remortgaging difficult.

It’s important to enquire about all charges (like early repayment charges) before going the equity release route.

  • Your benefits may be affected

Benefits such as the council tax credit and your pension may be affected as the equity that is released will increase your cash savings amount, making qualification less likely.

  • It could reduce the inheritance value

Equity Release means using the value that is tied up in your home, which you may have intended leaving as an inheritance.

Once the home is sold and the proceeds from the sale cover the loan, there may be little or nothing left for your family, besides any other assets you may have.

Is Equity Release Safe?

The answer is a resounding YES!

Today, equity release is highly regulated, preventing dubious lenders from taking advantage of unsuspecting people.

The Equity Release Council will ensure your protection.

IMPORTANT: Always use a lender that is a member of the Equity Release Council.

Is Equity Release the Right Thing for Me?

If you are over 55, a homeowner and in need of money, then equity release is definitely a viable option that could come to your rescue.

However, before considering equity release, remember to speak to your financial advisor about other options.

More good reasons to release equity:

  • It’s been suggested to you by your financial advisor as a good and safe option.
  • You predict a financial shortfall once you retire.
  • Downsizing is something you would rather prevent.
  • You are fine with reducing your inheritance.

Reasons to consider alternatives to equity release:

  • Your financial adviser has warned against it.
  • You have other ways to fund your retirement.
  • You don’t mind the idea of moving to a smaller, more cost-effective home.
  • You want to leave your family as much as possible when you pass away.

You & Equity Release – Making that Decision

The first step before making a decision is to book an appointment with your financial advisor. They will look at your situation and assess whether or not equity release is the best option for you.

Buying or Renting a Home?

Whether you rent or buy often depends on your financial situation. The downside of renting is that you are essentially paying off someone else’s asset, whereas if you buy, you are accumulating an asset of your won. You could even rent out that property yourself as an additional source of income.  

With renting, however, you have more freedom to move around if you’d like to.

A very important reason to buy a home is, of course, that it’ll one day give you the additional financial option of releasing equity from the property, something thousands of people in the UK are doing each year.

Finally, is Equity Release a Good Thing?

Equity release can really come to the rescue of home-owning retirees who need a cash injection! Under the right circumstances, it is a viable, easy financial solution. No wonder its popularity is on the rise!

Always remember to speak to your financial adviser, and ensure they’re a member of the Equity Release Council.

In Conclusion

There is no doubt that Equity Release is safe and can be an excellent financial

option of erasing financial woes during your retirement. Having to worry about meeting financial obligations during your sunset years is not ideal and with equity release, you have a great solution.

If you still want to guarantee a portion of your home’s value as an inheritance for your family, you can speak to your financial advisor about securing that in your specific equity release plan.

To find out exactly how much equity you could release, use this free online calculator, and book an appointment with a financial advisor to start the journey.

You also have the option of chatting to an independent financial advisor for free!

Interested in releasing money from your home while you're still living there?

Use our free equity release calculator & see how much you can release today.

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