Financial forecasters and experts are predicting that there could be a large upturn in the number of people choosing to release equity from their homes this year. There are a number of reasons for this prediction, including rising house prices, the increase in the cost of living and uncertain employment conditions. For those with cash tied up in property, it is often worth discussing how to use this equity to improve cash flow.
Economic case for equity release
Sadly the Covid-19 pandemic has disproportionately affected older workers compared to other groups of people. Many people aged 55 and over have found themselves put on furlough or even made redundant. Others have had their hours or salaries reduced due to the adverse economic conditions of the last two years. Furthermore, it is hard to know what economic challenges are yet to come in 2022.
This means many people who are close to, or nearing, retirement age may find themselves looking for other sources of income. Therefore some will consider equity release earlier than they had planned and this is not something to be concerned about as long as you consult an expert, qualified, equity release adviser.
Why equity release could be the right option for you this year
The most popular type of equity release product is a lifetime mortgage. They are available to eligible homeowners aged 55 and over. Lifetime mortgages allow you to release a tax-free lump sum without having to pay the interest off until you die, your home is sold or you go into permanent care.
You have a great deal of choice with a lifetime mortgage in terms of how much interest you want to pay and when and how you receive the cash. For example you may choose a lump-sum, instalments or a combination.
The money released from a lifetime mortgage can be used for whatever purpose you choose. Some people may choose to use it to increase their disposable income as mentioned above, or pay off debts. Others may choose to spend it on a holiday or home renovations.
Drawdown Lifetime Mortgage
The benefits of a drawdown lifetime mortgage appeal to many equity release clients because it allows you to release funds when you need them. This means you have less interest to pay and more control over your money. It should also have less of an impact on any means-tested benefits you receive. Talk to your adviser about this.
After you take out an equity release plan you can remain in your home for life. When you die or your home is sold, the loan will be paid off with the proceeds. Any money left over will go to your beneficiaries as stated in your Will.
Your adviser will talk to you about the no negative equity guarantee which means your estate will never owe more than the value of the property when it is sold.
:: Use our Equity Release Calculator to work out how much cash you could release.
It is important to take expert advice on equity release before deciding whether it is right for you. Contact us to find out more from one of our highly trained advisors.
Even better, get in touch with our team to have an initial consultation – no obligation and no cost to you. We’re always happy to answer your questions and have appointments available all over the country – from Devon to Yorkshire.
