In difficult financial conditions, many people are looking to make savings. For those fortunate enough to own their own home, this could mean releasing equity from their home.
Equity release is a financial option that allows homeowners to access the equity that they have built up in their property, typically in the form of a loan or a lump sum payment. This option is becoming increasingly popular among older home owners who are looking for ways to supplement their retirement income and cover the rising cost of living.
In the first half of 2022, 19.6% of equity release plans were taken out to cover everyday living costs, recent research1 showed. As the cost-of-living pressures mount, more of the 11 million older homeowners may access some of the £811bn currently stored in home value.
One of the main benefits of equity release is that it allows homeowners to stay in their own home while accessing the equity that they have built up in it. This can provide a significant source of income during retirement, allowing homeowners to maintain their lifestyle and meet the rising cost of living, such as healthcare and daily expenses.
Another benefit of equity release is that it does not require homeowners to make monthly payments, which can be a significant burden for those on a fixed income. Instead the loan, or lump sum is repaid when the homeowner dies or moves out of the property. This means that homeowners can access the equity they need without having to worry about making monthly payments.
There are different types of equity release options available including lifetime mortgages and drawdown mortgages. Each of these options has its own advantages and disadvantages, so it is important for homeowners to carefully consider their options and choose the one that best suits their needs.
Releasing equity from your home is not a decision to be taken lightly. It is important to note that equity release can have an impact on the value of your home and the amount of inheritance available to pass on to future generations, therefore it is important to seek independent advice from a financial advisor before proceeding with equity release.
Overall, equity release is a valuable option for older homeowners looking to supplement their retirement income and cover the rising cost of living. It allows homeowners to stay in their own home while accessing the equity that they have built up, and provides a significant source of income during retirement. However, homeowners should always seek advice from a financial advisor and carefully consider all their options before proceeding with equity release.
At MDJ Mortgages we are part of the Equity Release Council, which works to ensure a safe equity release market for consumers by operating rigorous standards for the provision of advice. We are a local company, based in the heart of Basingstoke Town Centre and we can support you in making the right decision for you and your family, helping you understand your options and finding out how much you can borrow.
Contact us today for more information.
*A lifetime mortgage is a long-term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate
1 Canada Life