Unlocking a portion of the value of your home as tax-free cash could give your later life finances a boost and help you enjoy the retirement you deserve.
Retirement is a period of life when we think of enjoying the time we have earnt – enjoying new experiences, realising ambitions, and sharing more time with the people we love.
However, it can also prove to be a period of reduced incomes. Relying on pensions and savings can see budgets constrained somewhat, meaning that some may have to forgo some of the retirement dreams. This has come to the fore recently in light of the statistics that as many as 1 in 8 in 2018 will be retiring having made no financial provisions for their retirement.1
The financial burdens placed on the elderly, with under-performing pensions for example, has also helped contribute to the stat that poverty amongst home-owners rises with age – 16% of over 65’s in comparison to 5% of 25-34-year olds.2 Clearly, home-ownership need not be the sole indicator of wealth; as a homeowner you could be asset rich, but cash poor. Without the ready access to capital, budgeting in later life may be proving difficult.
Unlocking the potential of your biggest asset
As an over-55 UK homeowner, there is a way that you could benefit from regulated access to a significant portion of your home’s value as tax-free cash. By releasing some of your equity with a lifetime mortgage you could find yourself with ready access to the capital that could help you enjoy a more comfortable retirement.
With a lifetime mortgage you could release as little as £10,000 tax-free from your home. The lifetime mortgage simply replaces your existing mortgage but features no required monthly payments and has no fixed end date. Once any existing mortgage balance is repaid, the remainder of the money is yours to spend as you wish. Freedom from monthly mortgage repayments could help further boost your budget. It’s important to note that a lifetime mortgage will reduce the value of your estate and may affect your entitlement to means tested state benefits. To better understand the features and risks to you, please aske for a personalised illustration. With fixed interest rates available for the duration of the mortgage, you can also be provided w
Safeguarding your equity
Thanks to government regulation, there are now a number of customer-focused safeguards in place that can put your interests first with any lifetime mortgage provided by an Equity Release Council approved lender:
- You and your partner are guaranteed to retain full ownership of your home until you either both pass away or both enter long term care.
Your balance, and accrued interest, is usually repaid through the sale of the property after you have passed away.
- You can never pass on lifetime mortgage debt to your heirs. The no negative equity guarantee ensures that you will never owe more than the value of your home – regardless of fluctuations in the property market.
- It is natural that you may wish to move into a new home, one that better meets your retirement lifestyle. That’s why most lifetime mortgages are fully portable, provided the new property meets the lender’s criteria.
The plan for you
The equity release market is currently expanding thanks to innovation and product diversity, as solutions are found to match the varied needs of customers. With over 80 different plans available, there is now sure to be a lifetime mortgage solution to your personal needs.
A Roll-Up lifetime mortgage features no required monthly repayments and provides you with access to a tax-free lumpsum to be spent entirely as you see fit. A Flexible lifetime style would allow you to make voluntary repayments towards the balance of your mortgage, which can help reduce the costs of your plan.
However, if you’re looking to use a lifetime mortgage to provide a “cash cushion” in retirement, then a Drawdown plan may be the best for you. As well as providing access to an immediate tax-free lump sum, you are also able to preserve a portion of your equity in an interest-free reserve. This reserve can be drawn upon in the future when you need the capital. What’s more, as the reserve is interest free – you only pay interest on the equity you actually drawdown – then you could help minimise the build up of costs.
Your home could be the secret savings you never knew you had. With regulated access to your home equity, you could give your finances a boost and enjoy a more comfortable retirement.
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
2 Joseph Rowntree Foundation, ‘Home-owners and poverty’, February 2018, p.15