PICTURE your retirement. You could have more holidays, spend time with friends and family. You can do whatever you like, whenever you like. You’ll never dread Mondays again.
Sounds great doesn’t it?
But what if you haven’t saved up enough in your pension pot for a comfy retirement – or you want to make improvements to you home but can’t afford it?
One of the options is equity release. This means taking cash tied up in your home and is open to those 55 and over.
What are my retirement funding options?
The state pension, designed to make sure we can continue to afford life’s absolute basics, is a vital financial foundation for older age.
On top of that, some of us will have a workplace pension and or private pension.
This retirement fund may not provide all the income or lump sum of cash you’d hoped for though – but don’t worry, you have options.
Many people choose to downsize in retirement or rent out an extra bedroom to a lodger for some extra income if they have extra space when family has flown the nest.
Or you could access some of the equity (also known as the value) from your home without the wrench and upheaval of moving. This is known as equity release.
You should also look at benefits or grants which may be available, such as assistance from your local council.
It’s also worth considering whether a personal loan would work out costing you less in the long term.
What type of equity release is good for you?
With a lifetime mortgage, the most popular form of equity release, you still retain 100 per cent ownership too.
A lifetime mortgage is a loan worth at least £10,000 that’s secured against your property once you’ve paid off any standard mortgage that you may have.
To qualify your property must be worth at least £70,000. The maximum amount you can borrow will depend on the property’s value and the age and health of the youngest homeowner, who must be at least 55 years of age.
The loan and the interest on it is paid off when you die or go into long term care. No debt is passed on to your loved ones as there is a no negative equity guarantee.
It doesn’t stop you moving house either, as depending on lenders criteria you may be able to take the plan with you when you move.
There are loads of other types of lifetime mortgage too, so it’s worth doing your research.
When you die – or move into care – your home is sold and the money is used to pay off the equity release plan.
Age Partnership are an equity release adviser and they will give you impartial advice and ensure that all positive and negative potential outcomes are discussed with you before any action is taken.
These are big decisions and equity release might not suit your circumstances.
Taking a loan against your home will reduce the amount you have in total and can pass on in inheritance to your loved ones.
It could also affect any current or future means-tested benefits you may receive, so it is crucial to talk everything through with an expert first.
Age Partnership provides its initial advice for free and without obligation.
Only if you choose to proceed and your case completes would a typical fee of £1,795 be payable.
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. To understand the features and risks, ask for a personalised illustration.
Equity release requires paying off any existing mortgage.
Any money released, plus accrued interest would be repaid upon death, or moving into long-term care.