The Benefits of Equity Release
Equity release schemes can be a way to access some of the equity tied up in your property. This tax-free cash can be taken as a lump sum or in instalments, and the best thing is it can be used however you want.
The advantage of equity release is that it gives you money to spend now, rather than leaving it locked away in your home. Rising house prices in the UK means that a large proportion of homeowners’ wealth is tied into their property, and inaccessible.
If your home has increased in value over the years, equity release can help you access some of that money to supplement your retirement income – instead of leaving it all to your beneficiaries, or to cover your long-term care costs.
Equity Release will reduce the value of your estate and may affect your entitlement to means tested benefits and tax status.
You are strongly advised to register a lasting power of attorney to mitigate the risks associated with managing financial affairs in the event of cognitive decline.
You will have tax-free cash to spend on what you choose
You won't have to pay tax on the money you release. You could use the money to:
- Pay off your mortgage or debts
- Make improvements on your home
- Top up your income and live more comfortably
- Help loved ones
- Pay for something for yourself, like a holiday
- Spend on whatever you want
The main advantages of equity release
You can continue to live in your own home, rent free, for the rest of your life or until you move into residential care.
The ‘no-negative equity guarantee’ means that you will not have to repay more than the value of your home and that your estate will never owe more than the property is worth when it is sold.
The tax-free cash that you release can be used on anything you choose, from home improvements, paying off a mortgage or debt, or for a holiday.
The flexibility of modern equity release plans means that you can release the money as a lump sum, or a lump sum with a drawdown facility.
You need to consider both the pros and cons of equity release
Equity release might be suitable for you, but it’s important to think about the pros and cons before making any important decisions.
- Equity Release is a loan secured against your home. It will reduce the value of your estate & it could affect your entitlement to means tested state benefits.
- It will affect the amount of inheritance you leave to your family, so it's important to discuss this with them
- Take professional legal and financial advice before doing anything, as Equity Release is not right for everyone.
While equity release could significantly benefit your quality of life, it is important to understand the potential drawbacks. Take your time and consider your options before making a decision.