If you are aged 55 or above and own your own home, you could be eligible to release equity from your property. This means you could potentially unlock some of the value of your home and turn it into cash.
However, it’s not as quick and easy as it sounds – so make sure you speak to an independent Equity Release expert before you start. It can prove costly without the correct advice as there may be more suitable options available, to enable you to raise capital.
But, done in the correct way Equity Release can help you raise cash making retirement a little more financially comfortable or for treating yourself or helping out your loved ones.
How does Equity Release work?
There are two main types of equity release products: Lifetime Mortgage and a Home Reversion Plan.
- With a Lifetime Mortgage, you borrow back some of your home’s value at a fixed rate. You don’t make repayments, however some versions allow you to pay back the interest to reduce the overall cost you repay when you die. If you don’t, interest compounds rapidly, so the amount you owe increases all the time and the equity in the property is reduced.
- A Home Reversion Plan is normally best suited to those over 70. A provider pays you a tax-free lump-sum or a regular income for a portion of your home, below the market value. You can continue to live in the home and the subsequent proceeds are split based on the percentage you retain versus that purchased by the provider – and if your property value increases, the provider gets back more.
Releasing equity will help you if you want to raise cash going into retirement. For many people, it can give you the chance to enjoy retirement without financial constraints.
It does mean that your estate has to pay off the debt after you die or if you move permanently into care – and can mean you leave less behind for loved ones. But it is your money, so it is entirely your choice.
Get advice beforehand
Equity Release can be a really expensive way to raise cash if it’s not carefully managed, so it is advisable to you speak to an Equity Release expert from Linear Financial Solutions before you begin.