The COVID-19 crisis has seen many industries across the nation grind to a halt. As the disease grips the economy many people are worried, not only for their health, but also for their finances. A survey by YouGov revealed 1 in 20 have lost their job and 1 in 11 have had their pay or hours reduced, resulting in a sudden loss of income.
UK government grants and mortgage payment holidays may help to soften the financial blow in the short term. However, millions of people live pay cheque to pay cheque with little or no savings in the bank. Despite government support people are undoubtedly feeling the financial strain and are at a loss for where to turn.
Property as the biggest source of finance
At times like these homeowners aged 55 and over may consider unlocking wealth tied up in their property to help ease financial pressure.
Property is typically the biggest source of wealth, particularly for older homeowners who have accumulated equity throughout the years as property prices have steadily increased.
For people who have been made redundant or suddenly find themselves unemployed, their property could be the most suitable way to navigate the uncertainty of the foreseeable future.
One of the most popular reasons to release equity is to support family, with this in mind, some older homeowners may consider equity release to support children and grandchildren who are financially impacted by the global pandemic.
Pensions and savings plummet
These unprecedented times have shook the economy and the stock market causing pensions, savings and investments to plummet. Banks have tightened personal lending and the government has put restrictions on the sale and purchase of property. As a result, there are few options available to raise finance.
However, the equity release sector and lifetime mortgages are still up and running. More2Life, one of the UK’s leading later life lenders, has rolled out an industry first – desktop valuations – which omit the need for surveyors to visit properties in person during the coronavirus outbreak.
What’s more, the interest rates currently available are some of the lowest the sector has ever seen and can be fixed for life.
Equity release at a glance
Equity release allows homeowners to borrow tax-free cash secured against their property without having to sell or downsize.
To be eligible you must be aged 55 or over and be a homeowner with a property worth at least £70,000. Although, it isn’t suitable for everyone and so it is important that you seek independent financial advice before making a decision.
At a glance:
- The cash you release is tax-free
- Interest rates are currently low
- You retain 100% ownership of your home
- You have the choice to make interest repayments or pay nothing at all
- You can spend the money however you wish
- There are hundreds of plans to choose from to suit your needs
If you’re one of our clients and would like some guidance, or if you’re an introducer looking for advice on behalf of your clients, please feel free to get in touch with Barry Leigh.