Fund Your Retirement with Equity Release

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When it comes to funding your retirement, traditional options can be limited, and 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 from 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 may be able to use equity release to unlock some of the value of your property as tax-free cash. The rise in property prices means that for many people their home is also their biggest financial asset. Making the most of all of your property wealth and other assets can provide you with the funds to enjoy a comfortable retirement without the need to downsize.

How does equity release work?

Equity release allows UK homeowners aged 55 or older to access their property wealth as tax-free cash, secured against the value of their home. The percentage you can borrow increases as you get older, up to a maximum of approximately 60%. The amount of equity you could release will depend on your age and the total value of the property, and the loan will roll up over time.

Most Lifetime Mortgage plans, the UK’s most popular type of equity release, will have the option of an interest rate that can be fixed for life. With the advice of an equity release professional, you will be provided with a personalised illustration that will show how much you will owe over time, allowing you to decide if equity release is the right option for you with full transparency. Our Reader’s Digest guide to equity release can provide you with a great overview of equity release and how it could help you.

Why is equity release a good option in retirement?

Equity release can be a great option in retirement, by granting you access to the value of your property and remaining in the same home that you know and love. With a Lifetime Mortgage, you also maintain 100% homeownership, meaning you can still choose to move if you decide you would like to, at a later date.

Releasing equity on your property can give you the freedom to experience your retirement as you choose, with many of our customers choosing to release equity for a variety of reasons that are important to them. Many have chosen to use equity release to clear an existing mortgage, gift an early inheritance, supplement their retirement incomes, make large purchases or even make renovations and improvements to the home from which they are releasing equity.

In releasing equity from your home you can spend the money as you choose, and you don’t need to spend it all at once. With a Drawdown Lifetime Mortgage you also 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. With this option you could spend big, with a large cash lump sum in clearing a mortgage or making a large purchase, and you have funds set aside to supplement your retirement income or just dip into on a rainy day!

As the interest is rolled up each year, the longer the equity release plan runs, the larger the final bill will be. But by releasing equity with an Equity Release Council approved lender, you will never owe more than the value of your home thanks to the 'no negative equity guarantee'. You will also 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.

A Lifetime Mortgage is, as the name suggests, intended to last a lifetime, with no required monthly payments. Instead, the full loan amount is repaid when the last deedholder on the plan passes away or moves into long term care, typically through the sale of the property.

Whether you're curious as to how much you can release, or you want to take the initial steps towards releasing equity, this handy calculator will give you the information you require. You can receive our Reader's Digest guide to equity release in the post or by email for more detail about equity release and how it could help you.

Or you can contact us on 0800 029 1233 to discuss your needs with a view to arranging a no obligation face-to-face home visit with one of our financial advisers.

Recommended Articles

·         Equity Release FAQs

·         How to find Equity Release advice

·         How does Equity Release Work?

 

A Lifetime Mortgage may impact 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 £1,490. Our adviser will talk through the setting up costs of a Lifetime Mortgage before you make any decision to proceed.

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