How equity release could help you

Equity release could help meet your financial needs

If you are a homeowner aged 55+ and find that your regular income is not enough – or that you need extra cash for a one-off purchase – you could meet the shortfall through equity release. 

On average, 70,000 people in the UK each year use equity release as a way to meet a wide range of financial goals, according to the Equity Release Council. These goals include everything from clearing a mortgage to boosting annual income.

We’ve put together this guide to the types of circumstances and financial challenges that equity release may be able to help you with. There are of course options other than equity release and we look at those too.

You can also get professional advice on your options through Equity Release Wise: call us on 0808 178 3055 or request a call back and we can arrange a no-obligation appointment with one of our selected equity release advisers.

Are you ‘cash poor, asset rich’?

It would be great if we all could enjoy an excellent financial situation in later life, but sadly that isn’t always the case. Many people simply don’t have the income they need, despite working hard all their life. But they may be wealthy in terms of property: being ‘cash poor, asset rich’ is a common situation for homeowners in later life.

If this sounds like your situation, it could be time to find out whether there’s a suitable solution. One option could be via equity release, which lets you access cash tied up in your home with no repayments, interest or rent to pay. The plan ends and the release is paid back through the sale of your home only when you pass away or move into long-term care.

Equity Release Wise brings you access to equity release quotes and deals through one of the UK’s largest equity release specialists. Find out how much you can borrow: check here for an estimate of how much tax-free cash you may be able to release from your property wealth. Alternatively, talk to one of our friendly consultants by calling 0808 178 3055 or request a call back.

What financial needs are you looking to meet?

There are all kinds of reasons for equity release. It’s often chosen as a way to generate extra income on a regular basis or as and when needed. But income is just one reason for choosing equity release. Many people use equity release to pay off a mortgage, so that they remove the burden of monthly payments. Others use equity release to pay off an interest-only mortgage, clearing the capital owed at the end of the mortgage term.

Equity release is also often chosen as a way to escape the burden of debt repayments. People ask us ‘can I release equity to pay off debt?’ and the answer is often ‘yes’. Equity release is a way to clear debts that put a strain on monthly expenses. Debts that have been cleared this way include credit cards and overdrafts.

Homeowners take out a lump sum lifetime mortgage to meet other needs for a one-off cash release. Equity release for home improvements is especially popular. Other big purchases include buying a car or caravan, or enjoying a much-needed holiday.

“Equity release is a way to clear debts that put a strain on monthly expenses.”

Another common reason for equity release is to help out loved ones financially. In particular, many people have accessed cash to help their children or grandchildren with a deposit to get on the property ladder. You could view it as giving them an inheritance early, when they need it the most rather than later on.

Finally, some people are using equity release to buy a second home or a buy-to-let property. If you have the aspiration to do either of these but lack the necessary funds, equity release could help to make your dream a reality.

To find out more about potential reasons for equity release, see our guide: What can I use equity release money for? You can also talk to our friendly equity release consultants by calling 0808 178 3055 or request a call back.

What are some alternatives to equity release?

There are of course other ways that you may be able to access a lump sum or an additional income after the age of 55, some of which you may have considered. Here are some equity release alternatives, which may or may not be viable for you:

Downsizing

The most obvious way to access money if you own your own home is downsizing. This has its advantages and can be a more financially suitable decision than equity release. However, many people love their home and simply don’t want to move. They may also like being near their family and friends, and don’t want to move away from them. Other people could stay in their local area but only by moving to a smaller home, and that isn’t something that would work for them.  

Taking a lodger

Renting out a room in your home could be a way to generate additional income. Unsurprisingly however, many people don’t want to start sharing their home with a stranger. Make sure you understand the law around renting out a room when considering this option, including your responsibilities as a resident landlord.

Boosting your income through work

There is of course also the option of delaying retirement or taking a part-time job instead of taking out an equity release plan. This is a viable option for some people and you can usually work without it affecting your state pension or private pension, although you may be liable for tax depending on the size of your total income.

Other alternatives to equity release

Living off your savings or investments is another option that could make financial sense instead of taking out an equity release plan. Another potential option is a home improvement grant. If you are considering equity release for home improvements on health grounds, you may be able to apply for a local authority grant instead. However, a grant may not be available to meet all of the costs of adapting your home.

What are your financial goals? 

You can discuss all of the alternatives to equity release listed above and more with our selected equity release advisers. They have a legal and regulatory obligation to make sure you understand and consider alternatives to equity release schemes before making a decision. They will also explain the benefits and risks of equity release, taking into account your personal circumstances.