A Comfortable Retirement in Your Own Home

The tax-free capital boost of a Lifetime Mortgage could help you enjoy your retirement in the home you love – yours.

Your Property Wealth

In an economic climate of low rates, underperforming pensions, and increasing costs of living, many of the UK’s older population may be facing an increasingly bleak financial future. A survey by the Financial Conduct Authority indicates that at least one in three retirees will have to rely solely on their state pension, which can have profound implications on the quality and comfort of their later lives.1

As such, many are turning to their property wealth as a means of providing an all-important boost to their retirement finances. For many, downsizing may appear to be the only viable option. Research has indicated that almost half of UK pensioners questioned – 5.7 million people – are considering this option as a way of accessing capital in their retirement.2


The Costs of Downsizing

However, the FCA’s research also indicates that these same later-life UK homeowners could stand to lose as much as £29,000 on average because of the assorted costs of moving including stamp duty, estate agent costs, conveyancing fees, and survey expenses. These costs can often eat into the precious capital released by downsizing, which may lead one to ponder whether it is financially viable at all. Movers may be left requiring an income to supplement a pension, but lacking a property that is able to adequately provide it.

Furthermore, these financial costs say nothing of the emotional and physical drain that moving from your cherished family home, full of memories and a place where you have spent years, may cause. Research by Aegon has already revealed that almost three quarters – 73% – of the UK’s over 65’s would be reluctant to part with their homes to cover costs such as care that may arise in later life.3


Your retirement, your home

For the UK’s over-55 homeowners however, there is a viable alternative to downsizing that could provide them with tax-free cash as well as the opportunity to enjoy their later years in the comfort of their own home. Recent research has indicated that the total value of all UK houses has passed the £6 trillion mark, with over-55’s holding two thirds of the total.4 Not only is this sum four times the total of the UK’s national debt, but it could be the key to enjoying a comfortable retirement.

A Lifetime Mortgage, one of the most popular forms of equity release available on the market today, could allow you to access a significant portion of your property’s equity as tax-free cash.


How does it work?

A Lifetime Mortgage is simply a loan secured against your property that allows you to access the equity built up in your property through your regular mortgage repayments and the strength of the UK’s property market. The cash you release is used to clear any debt already secured on the property, such as an existing mortgage, and then the remainder is free to use entirely as you wish. You could invest in improving your quality of life with home improvements, a once-in-a-lifetime trip, or simply use it as a significant rainy-day fund for whatever life throws up next.

The Lifetime Mortgage has no fixed end date, running for the duration of you and your partner’s life, or until you both enter long-term care. At this point, the mortgage balance, including the interest accrued, is repaid through the sale of your property. Any difference remaining is then distributed according to the wishes of your Will. It is important to note that a Lifetime Mortgage may impact the value of your estate, and the tax-free cash you release could affect your entitlement to means tested state benefits. To understand these features and risks, we can provide you with a personalised illustration. Plans feature no obligatory monthly repayments, which could provide you with a significant boost to your later-life finances. As the interest rates are typically fixed from the start you’ll know the costs of the plan. With plans from an Equity Release Council approved lender, you can also know that you will never lose the ownership rights to your property for the duration of the plan, nor will you ever owe more than the value of your home thanks to a no negative equity guarantee.


Could a Lifetime Mortgage be right for you?

The previous quarter has seen a staggering £824 million in equity released from homes across the UK, a 44% annual increase.With a range of plans available, now could be the time to find out if this increasingly popular financial strategy is the key to you enjoying a retirement in the comfort of your own home.

Could equity release help you? Call us now and speak to one of our expert team who will give you all the information you need.

0800 652 2955

1 The Guardian, ‘One in three UK retirees will have to rely solely on state pension’, 21/10/17
2 Thisismoney.co.uk, ‘Shocking cost of downsizing revealed: Older homeowners stand to lose £29k moving to a smaller home (and stamp duty’s only half of it!)’, 12/08/17
3 Money Observer, ‘Retirees unwilling to sacrifice their home to cover social care costs’, 02/10/17
4 The Guardian, ‘Value of UK’s housing stock soars past £6tn’, 29/11/17
5 Equity Release Council, ‘New equity release plans rise by a third as lending passes £800 million in a single quarter for the first time’, 30/10/17

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    Responsible 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 (http://www.fsa.gov.uk/register/home.do) under reference 610205.

    This is a Lifetime mortgage which may reduce the value of your estate and may affect your entitlement to state benefits. To understand the features and risks ask for a personalised illustration.

    Any information contained herein is a personal opinion of the author and should not be considered to be advice of any kind. Inheritance Tax planning is not regulated by the FCA. Think carefully before securing other debts against your home. By consolidating your debts into a mortgage you may be required to pay more over the entire term than you would with your existing debt.

    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.