When it comes to funding your retirement, traditional options can be limited. Many people find themselves left with essentially only two choices for income: the state pension, or any personal savings and investments that may have been accumulated throughout your working life.
However, you may be overlooking the role one of your most valuable financial assets can play in your golden years. If you own your home, you could use equity release to unlock some of the value of your property as tax-free cash. A rise in house prices over time means that for many people their home is also their biggest financial asset. Making the most of your property wealth and other assets can provide you with the funds to enjoy a comfortable retirement without the need to downsize.
Could this be the right option for you?
Equity release allows UK homeowners aged 55 and above to access their property wealth as tax-free cash, secured against the value of their home. The amount of equity you could release will depend on your age and the total value of your home. The older you are, the more you are likely to be able to borrow.
Reader's Digest Equity Release can provide helpful guidance when it comes to finding out how you can unlock your property wealth with the UK's most popular type of equity release product, a Lifetime Mortgage. The advisers we provide access to can recommend plans with interest rates fixed for life and can provide you with a personalised illustration that will show you how much you will owe over time. This can help you decide if equity release is the right option for you with full transparency.
It is important that you seek professional advice as releasing equity from your home can affect your entitlement to means-tested benefits and will reduce the value of your estate. Reader’s Digest Equity Release has created a comprehensive guide which can provide you with a great overview of the solutions available and how these solutions can help you fund your retirement. If you're ready to move forward, the guide will also explain how the advice process works.
Why is equity release a good option in retirement?
Equity release can be a great option in retirement, granting you access to some of the value of your property all while remaining in the same home that you know and love. With a Lifetime Mortgage, you also maintain 100% homeownership and you can still choose to move at a later date.
Releasing equity from your property can give you the freedom to experience your retirement as you choose, with over 55s unlocking cash from their homes for a variety of important reasons. Many have chosen to use equity release to clear an existing mortgage, gift an early inheritance, supplement their income, make large purchases or even make renovations and improvements to the home from which they are releasing equity.
When releasing equity as you are in or approaching retirement, you don’t need to spend it all at once. With a Drawdown Lifetime Mortgage, you have the option of setting some of your released equity aside in a drawdown fund, which will only accrue interest after you have accessed it. This option means you could spend an initial amount on your immediate needs and still have funds to supplement your disposable income or other ventures. Do note that the money drawn down will be fixed at the prevailing rate at the time and could be higher or lower than your initial interest rate.
A Lifetime Mortgage is, as the name suggests, intended to last a lifetime. There are no required monthly repayments, although you will be encouraged to make them if you can. As interest rolls up each year, the longer the equity release plan runs, the larger the final bill could be. Making payments can therefore help to limit the cost of borrowing over time. You could make payments towards the interest or amount borrowed on either a regular or flexible basis.
The amount borrowed, plus any interest not paid back during your lifetime, is only due for full repayment once the last homeowner has passed away or entered long-term care. This is typically achieved through the sale of the property.
Reader's Digest Equity Release only recommend plans from Equity Release Council-approved lenders, so you will never owe more than the value of your home thanks to a no-negative-equity guarantee. This guarantee means you will never pass Lifetime Mortgage debt onto your loved ones, as in the unlikely event your loan exceeds the value of your property, any excess will be written off by the lender.
Whether you’re curious as to how much you can release, or you want to take the initial steps towards releasing equity, the handy equity release calculator on this page will give you the information you require. By filling it out, you can receive the Reader’s Digest Equity Release guide by post or by email. It contains more detail about equity release and how Reader's Digest Equity Release could help you.
Or, if you want to speak with Reader’s Digest Equity Release directly, you can contact the Information Team on 0800 066 2491 to discuss your needs with a view to arranging a no-obligation face-to-face home visit or telephone call with a fully qualified adviser.
A Lifetime Mortgage will reduce the value of your estate and could affect your entitlement to means-tested benefits. Think carefully before securing other debts against your home. To understand the features and risks ask for a personalised illustration. Reader’s Digest Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/) under reference 610205. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,690. Our adviser will talk through the setting up costs of a Lifetime Mortgage before you many any decision to proceed.
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