Why equity release can be a great alternative to downsizing
Many pensioners are experiencing tough times as interest rates remain low on savings and the cost of living increases; however, while some pensioners are cash poor, they could own a valuable property.
One solution to improve your financial situation is to downsize by selling your current property and moving to a cheaper and smaller property; however, you may be reluctant to leave your beloved family home that is full of memories and want to avoid the inconvenience of moving.
Save the hassle of moving
There is often a lack of motivation to move until later in life. By this point, ill health may make a move much more arduous.
If this is the case, equity release could provide the solution. The popularity of equity release rose considerably last year and attracted twice as many customers as in 2012.
One of the most favoured types of equity release is a lifetime mortgage, which is a loan secured against your property. This entails borrowing money against your home’s value, which is payable at the end of your plan. This is usually when you or another applicant move into long-term care or pass away.
Improve your financial situation
The money can be withdrawn in smaller amounts or one lump sum and you are charged interest only on the amount you release, which helps to keep costs low. Although equity release rates tend to be higher than mortgage rates, they have dropped in recent months. Property wealth is now making a large contribution to planning for retirement.
Equity release has become an alternative for those aged 55 or over who are experiencing a squeeze on traditional retirement income strategies due to low interest rates.
You should seek professional advice before choosing equity release; for example, contact a company such as https://chilvester.co.uk/equity-release/ for equity release Marlborough.
Pay off debt or renovate your home
Retired homeowners released £3bn from their property last year, making the most of low interest rates and rising property prices.
A study of equity release customers found that around half used the released equity to renovate their existing homes. Another 45 per cent chose to pay off existing credit cards, loans and mortgages. 14 per cent used all or some of their funds to support their families, with many helping younger family members to buy their first homes.
