Retired and struggling financially? Should you release the equity in your home?

We all have ideas of what our retirement will mean. But the reality is sometimes different. Many will enjoy blissful relaxation. But others will face a financial struggle, and thoughts then turn to ways of boosting the bank balance.

Equity release is one such possibility. It’s a way of using the value in the home that you own to fund day-to-day living, or even a long-awaited holiday of a lifetime, or an extension (there are usually no prescribed uses for the money). The key question is: would equity release be the right move for you to make?

As ever, there are pros and cons. So it is really important that you get good advice from a trusted expert on the various arrangements that are open to you. Suffice it to say that there are two standard forms of equity release. The first is a lifetime mortgage that can provide a lump sum payment, or regular, staged drawdown payments. That money is yours to do with what you like, and of course you get to stay in your home rather than take the more drastic step of selling up. It can be an attractive option, but there are downsides – not least that you are likely to be met with a greater interest liability than under a mortgage that you may have had before.   

The second option is called home reversion. This is where you give up the ownership of some or all of your property in return for a one-off payment or regular, smaller payments. As with a lifetime mortgage, you get to stay in your home for the rest of your life. But bear in mind that, under a home reversion arrangement, you stand to receive less than the market value of the property. That is sometimes enough to put off people who might be able to find the money they need in other ways – perhaps by selling their property in the usual way. 

Equity release is often not planned far in advance, and it needn’t be. But we encourage our clients to consider all options as part of managing their financial affairs. The sooner you can get to grips with the best ways of providing for your future, and for the future of loved ones, the better.

Contact our conveyancing team for advice. We’ll help put in place the arrangements that will work for you. Tel:  01264 353411, email: conveyancing@bsandi.co.uk or fill in our no obligation, online enquiry form.