Equity release as an alternative to downsizing

A Lifetime Mortgage can help boost your budget, without the need to downsize

In recent years the economic climate has squeezed retirement budgets, with low rates of interest and rising inflation, meaning many over-55s are being left with an income shortfall in their later years. For some downsizing can form a part of their financial plan, but others might be feeling under pressure to sell up in an attempt to free up enough money for a comfortable retirement.

Downsizing is not always the preferred option, especially if it is the family home. Years spent making a house into a home and the collective memories can add significant sentimental value to a property. Additionally, homes tend to be ideally situated between family, friends and vital services. Plus, selling up can be a stressful, lengthy, and expensive process.[1]

If you are an over-55 homeowner and are searching for an alternative to downsizing, then you could stand to benefit from releasing a portion of your home’s value. The UK’s most popular way of releasing equity is with a specialist mortgage, known as a Lifetime Mortgage. A Lifetime Mortgage is a type of equity release where you access some of your home’s value as a tax-free lump sum. Unlike other ways of releasing equity, you retain 100% ownership, and there are no required monthly repayments. Meaning you could remain in your home for as long as you wish and enjoy the access to capital without limiting your budget.

The money released can be used any way you wish, potentially providing you with a cash cushion in retirement. On top of this, strong product diversity means that you could structure your release to best suit your needs. For example, a Drawdown Lifetime Mortgage allows you to create an interest-free reserve to be accessed at your convenience. Interest is accrued only on the withdrawn money, reducing the build-up of interest while still giving you access to capital as and when you need it.

It is recommended you speak to an adviser before deciding on equity release, as they can provide you with a personalised illustration. This is important, as unlocking some of your home’s value now, may reduce the value of your estate in time and may affect your entitlement to means-tested state benefits. Fortunately, plans provided by Equity Release Council approved lenders include customer safeguards, giving you peace of mind.

The no-negative-equity guarantee ensures you that you cannot owe more than the value of your home, meaning you cannot pass on any Lifetime Mortgage debt. There are plans which offer inheritance protection, allowing you to ring-fence a portion of your home’s value to be passed on to your beneficiaries as a guaranteed, minimum inheritance.[2]

Unlocking your property wealth can give you the budget boost you need to remain in the home you love while enjoying the financial flexibility you need.

Use our free online calculator to find out how much you could release today: http://www.responsibleequityrelease.co.uk/equity-release-calculator/ 

Could equity release help you? Call us now and speak to an expert Information Team Member who will give you all the information you need.

01752 422 930

[1] Source: unbiased.co.uk – ‘Does it make sense to downsize?’ (November 2018)

[2] Source: Equity Release Council – ‘Autumn Report 2018’ (September 2018)

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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.