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Mar 23

How To Make Sure If Equity Release Is the Right Option For You

Reading Time: 3 mins

As one of the most popular retirement financial products currently on the market, you probably wonder if an equity release is right for you. Both lifetime mortgages and home reversion schemes have merit, but they’re not for everyone. 

Fortunately, there are some surefire signs that equity release could be the answer to your retirement financial needs. Jason Stubbs, equity release expert from EveryInvestor, will explore the world of equity release and help you determine if it’s the way forward for you and your family. 

Here are five signs that equity release might be the best option to unlock the key to your retirement dreams.

You Own Your Property

Fortunately, 74% of UK retirees own their homes, and if you’re in this majority, then equity release could be the perfect option to serve your financial needs. So, if you’re over 55 and your property is worth £70,000 or more, you could qualify and may want to consider using the cash tied into your property.

You Don’t Mind Reducing Your Inheritance

Unless you have the financial means to pay off your equity release loan amount and interest, your plan will reduce the value of your inheritance. This is because you’re essentially using the value of your property instead of leaving it to your heirs. 

However, you can opt for inheritance protection that sets aside a portion of your estate for your loved ones that the loan or compound interest can’t touch. And you can opt to use equity release to give your kids an early inheritance and avoid inheritance tax, but you won’t benefit from the full value of your estate. 

These may not be issues if your children are in a good financial position or you don’t have heirs.

You Don’t Have Retirement Savings

With the majority of UK retirees having less than £10,000 in savings, financing a good life may be a challenge. If this is you, then equity release could supplement your retirement income.

You Rely on a State Pension

In the UK, the average state pension pot sits at £61,897, giving you significantly less than you need for a basic standard of retirement living. One thing to note is that equity release affects your means-tested benefits, as those are based on your financial standing.

You Want to Use Your Property Income & Stay at Home

The other most popular retirement solution in the UK is downsizing, but this may not be ideal for many. The disadvantages of downsizing include: 

  •  Moving is a stressful and tiring process. 
  • There are some major costs involved. 
  • You may need to sell some of your special furnishings and trinkets. 
  • You may not have space for family visits. 
  • You’ll lose the comfort and familiarity of your family home. 

On the other hand, you benefit from your home’s full value. But if moving is not for you and you’d prefer to stay at home, then opting for a retirement mortgage, like an equity release plan, might be better. 

In Conclusion

If you’ve read through these five key points and can relate, then equity release could be the perfect way to fund your retirement. If so, your first step is to contact a financial adviser or equity release lender. They will look at your individual circumstances to ensure a plan is, indeed, right for you. 

Make sure that all the vendors you work with are a part of the Equity Release Council. That way, you can unlock equity with confidence, knowing that you’re in safe hands. Visit the free portal, EveryInvestor, for more information on these fantastic products.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. 

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