The cost of living is increasing day by day, and yet the rate of household income is holding steady – particularly so for those of us that are at retirement age. Whether you’re looking to just release a little money to use for everyday expenses or if you’re putting your spare change towards something bigger like a holiday or a new car, releasing equity from your home can be a manageable way of affording the things you’d like to find the money for.
If you have your own property, then an equity release is a way of obtaining tax-free money that’s only repayable when you sell your property to whatever end, or you and your partner pass away. It is because of this that it’s essential to do your research before committing to release any equity from your property – this decision is lifelong, with no monthly repayments.
Increasing popularity
More and more people are turning to equity release as a way of acquiring those sought-after funds, a new report from Key Retirement Solutions’ Market Monitor shows. There was a 5.5% increase in new plans being opened, according to the report, with the amount of currency released from estates rising by 10% in the last quarter of the year.
The report has also highlighted the regions in which equity release has proven to be more popular, namely Northern Ireland, Scotland and the south-east of England. The amount of capital being released has increased in these regions too, along with London, and this can be attributed to the rising value of the housing market, which – for the first time since the 2008 financial crash – has been recovering at an impressive rate.
The reason as to why more and more people are turning to equity release is a question that still needs to be answered though, and the report discusses the changing reasons homeowners need access to the money.
Whilst 59% of Key Retirement Solutions clients use their money to improve their quality of life, be that home improvements or holidays, 23% are using the money to clear the owning capital on their mortgages – a problem caused by interest-only mortgages that’s only truly coming to light now.
Making sure equity release is right for you
At this point, there are seemingly few reasons as to why equity release doesn’t make perfect sense.
Financially, it could be the perfect option for you, but as the commitment is one that will stay with you it’s important that you look at all the other options that are available.
By releasing equity from your property, you decrease the total value that’s left on your selling of the property, or your passing. If you’re planning on leaving the property as inheritance to your children, it’s a good idea to get them involved in the process early on so they understand what is happening, and why you’re doing it.
Other options include re-mortgaging your property, or taking out a loan – depending on what the money is for, of course. There is also the option of downsizing as another way of releasing money from your property. After all these considerations, an equity release may be the best financial move for you – just be sure to do your research.
Hi, Interesting article. What’s the difference between equity release and re-mortgage. I always though they were the same thing. Thanks Ali