Both enjoy & bank on your home image

Property wealth can play an increasing role in delivering the money needed both ahead of, and into, the retirement years…

The old-established view that income in retirement will be largely based on pensions may not hold true anymore. Fortunately, other funding options do exist, and one route is through property wealth, where homeowners could:

downsize to a cheaper property to raise funds.
remortgage their existing home (if they meet the age and affordability criteria) via a later life mortgage product – which would require monthly payments.
■ take out an Equity Release mortgage (if the homeowner is 55+), which provides funds, and allows them to stay in their home.

No affordability criteria to meet.
– Can opt to not make any monthly payments against a, generally, fixed interest rate deal.
– You can potentially benefit from a better deal if you have a qualifying medical condition.
– The provider of the loan would reclaim the capital (and any accumulated interest) through the sale of the property, once the final planholder dies or moves into long-term care.
– There are also client protections in place if a plan is taken out via a lender aligned to the Equity Release Council

Whilst we focus on equity release in this article, it may not be the best route for everyone, and other options do exist.

Equity Release marketplace

If you want to get a feel for the total property value out there, UK property wealth held by homeowners aged 55+ stands at almost £3 trillion.* To put this figure into perspective, all outstanding regular mortgage lending is less than half that amount, at £1.4 trillion!**

So, it probably comes as no surprise that an increasing number of lenders are now entering this sector. This has resulted in a wider range of product offerings, with a sizeable part of those efforts targeted at the equity release arena.

Use of the funds – You decide

If it’s relevant for you (or perhaps your parents), it allows, for example, those aged 60 to borrow up to around 25% of the home’s value, rising to about 55%, if aged 90+. Also, do consider involving your children in the decision-making process, if applicable, since an equity release plan would reduce the value of your estate.

As for the funds you raise, you can then use the tax-free money for anything you like, such as:

■ help to clear an outstanding mortgage.
■ enable much-needed home improvements.
■ settle debts.
■ assist with regular bills.
■ secure money to adapt the home for care needs, or to help with ongoing care costs.

(Sources: *Office for National Statistics, Wealth and Assets Survey, July 2014-June 2016 period, released February 2018; **UK Finance, November 2018)

Related Posts

How to Reduce the Cost of Equity Release

Homeowners aged 55 and over unlocked £1.17bn of property wealth during Q2 2021. There were 20,352 new and returning customers who accessed some of the cash tied up in their homes. As the number of borrowers continues to soar and the amount of property wealth that UK homeowners access also increases, it’s ever more important …

Is Equity Release a Good Idea and is it Safe?

More and more people are considering equity release as a way to raise cash in later life. Factors including increasing life expectancy, coupled with a state pension age that is a moving goal post, are just some of the reasons why equity release is becoming a more popular option in retirement. However, you may have …

How Equity Release Can Help Reduce Inheritance Tax

As inheritance tax bills increase, more and more people are looking for ways to reduce their inheritance tax liability and equity release can be an option for some. What is Equity Release? Equity release allows you to access the cash tied up in your home via a loan that is secured against the value of …

New Partnership with Strathmore Wills & Estate Planning

We are delighted to announce our new partnership with Strathmore Wills & Estate Planning! By way of introduction, we spoke to our new partners, Ravi and Kamal, to hear first-hand about their company and what the new partnership means for them, their business, and most importantly, their clients… Tell us about your company, what services …

How can we help you to help your clients?

Become an introducer

Leave a Reply

Your email address will not be published. Required fields are marked *