If you're over the age of 55, equity release offers you a way to use the value of your home to raise money.
It is advised that you seek Independent Legal advice before entering into a legally binding equity release contract.
Why do people consider Equity Release?
- To provide an additional income
- To provide lifetime gifts to relatives
- For home improvements
- For holiday home purchase
- To fund long term care
- You probably have other ideas - there is no restriction on how you use the funds.
What should you consider?
However, since equity release can be an expensive way to raise money when taking into consideration payment of arrangement fees or interest, you should also consider the following:
- Sell your home and live in rented accommodation- This option involves selling your house and investing the proceeds in income producing investments. The income from these investments is then used to rent a property and for your living expenses. You would only really be able to generate sufficient income to live on if your property was sold for a large sum of money, so this option should only really be considered if your house is worth in excess of £400,000.
- Benefits entitlement - Have you checked to see that you are getting all of the benefits you are entitled to? It may be that you are entitled to benefits that make equity release unnecessary. Also equity release could affect your entitlement to means-tested benefits so it's worth speaking to your local authorities to consider these areas first. They may be able to offer you grants or assistance with essential home improvements and alterations that you would otherwise pay for yourself.
- Your Savings & Investments - If you have savings or investments you may wish to consider this alternative.
- Rent out a room - If your house is sufficiently large you might consider renting out a room to bring in regular extra income.
- A smaller home - If your family have grown up and they are off on their own financial journey now, your current home may be too big for your needs and you could consider something smaller and more economical to run. In this case, you could consider purchasing a smaller property, leaving you with a lump sum on completion.
Equity release has to fit with your needs, circumstances and preferences, where the benefits need to outweigh the drawbacks and be more suitable than alternative methods of raising funds.