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As retirement approaches it is often financial security that is the main concern for many.
For certain U.K homeowners it can be equity release that helps offer a viable solution to this worry. These products unlock value tied up in a property, and provide a tax-free lump sum without the need to actually sell the home.
This quick guide explains a bit more about Equity Release, and how it can be a vital lifeline for many.
Equity release is a financial product that allows homeowners aged 55 and over to access the cash value of their property, while still retaining the right to live in it. The most common type is known as a ‘Lifetime Mortgage’.
Lifetime Mortgage: This is the most popular option. You borrow a portion of your home’s value, with interest added to the loan amount over time. Repayment of the loan including the added interest is only made when you sell the house. This is typically upon death, or when moving into long-term care.
How Equity Release can help:
Supplementing Retirement Income: With rising living costs and potential shortfalls in pension savings, equity release can provide a valuable income boost.
Home Improvements: Often people approaching retirement age wish to adapt their homes for aging. This could be anything from a new bathroom, to installing a new stairlift or easily accessible bedroom.
Clearing debts: Paying off existing debts, including the final bit of the mortgage or some credit cards. This can quickly ease financial pressures and improve overall well-being .
Supporting Loved Ones: Equity release can also allow homeowners to gift money to children or grandchildren. It could help family members with education, house deposits, or other financial milestones.
Inheritance Taxes: Reducing the size of the estate can also lower potential inheritance tax liabilities. The advice of financial advisor is required here, and Clarity Wealth can arrange these relevant meetings if this is something you would like to explore.
And the most important one! ENJOYING LIFE: It could be a dream holiday, taking up new hobbies, or simply having extra funds for leisure when you want it. In the right circumstances, Equity Release can enhance your quality of life.
Equity release is definitely not without its complexities and potential downsides. It is vitally important to understand the following:
Impact on inheritance: Equity release reduces the value of your estate, which may affect what you leave behind for loved ones.
Interest: If unserviced, the interest will ‘roll up’ over time, and will compound.
State benefit eligibility: Receiving a lump sum could affect your entitlement to certain means-tested benefits currently received.
Equity release can be a lifeline for many. Whether you’re looking to clear debts, support loved ones, or simply enjoy a more comfortable retirement, understanding your options and seeking expert advice will help you make the most of your home’s value.
Click the ‘Book an Appointment’ button at the top of the page to get in touch about Equity Release products.
Clarity Wealth Management LLP is authorised and regulated by the Financial Conduct Authority. No: 575252
Registered in England and Wales as a limited liability partnership. No: 0C371189
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.