Could Equity Release Be The Right Solution For Your Retirement?

How To Support Your Living Costs In Later Life

Are you a homeowner? If you have equity built up in your home and need additional income to fund your retirement, then equity release could be for you.

17% of Brits are not saving a pension at all to be used in later life, according to Scottish Widows. As a result, more than a fifth don’t believe they’ll ever be able to afford to retire. If this is the situation you’ve found yourself in as you approach the average retirement age of 65.3 years for men or 64.3 years for women, then equity release could be an excellent option for you. If you own the home you live in outright, then the equity you’ve built up in the property can be released to support your living costs in your later years. But is this the right solution for you?

Funding Your Retirement

Many people of working age dream of retirement as being a time to kick back, relax or perhaps take some once-in-a-lifetime trips around the world. Unfortunately, the lack of income at this stage means that 1 in 5 single pensioners are forced to live merely on state pension and benefits according to the latest Pensioners’ Income Report as published by the DWP.

Understanding Equity Release

As an alternative means of accessing cash, you can release up to 100% of the equity in your home to be used however you wish. Depending on your circumstances, you can choose to access the money either as a lump sum, or else by setting up an equity release drawdown fund. In the latter, you would receive smaller, regular payments to live off. The interest accrued from such an arrangement can be paid on a monthly basis if you prefer. Alternatively, it can be rolled up and will be payable when the property is sold following your death.

Staying In Your Property

When you choose equity release, there are no concerns about you losing your home so long as the plan holds either the SHIP or Equity Release guarantee. You can be assured that you will be able to reside in your property, as your main residence for the rest of your life. If you choose to move house at some point, then many equity release plans are portable and will allow you to switch to another property. If this is a possibility for you at some point in the future, then make sure you receive equity release advice from professional advisors first.

Impact On Your Beneficiaries

Perhaps the biggest point to consider with equity release is the effect it may have on your beneficiaries. If you have family who depend on you, then be aware that your home will need to be sold following your death as part of the equity release arrangement. The equity that you’ve already removed from the pot, will reduce the sum to be passed onto your loved ones. Additionally, if you have chosen to roll your interest payments up rather than pay them each month, then this lump sum will also be deducted from any value left in the property.

Equity release plans are fully regulated by the Financial Conduct Authority. If you’re interested in this type of funding to support your retirement, then get in touch with a reputable professional equity release advisor to explore your options.