LOW RATES MAKE EQUITY RELEASE MORE ATTRACTIVE
For many over-55s, retirement years provide the perfect opportunity to relax and unwind, enjoy spending time with family and travel on long dreamed-of holidays to far off places.
But with rising living costs and smaller pension pots now increasingly commonplace, recent retirees can also be worried about whether their finances are fit for the future – causing many to look for alternative ways to boost their retirement income and help them enjoy their free time.
And perhaps that’s why more Scots across the country are turning to their property to help pay for everything from home repairs to exotic holidays, taking advantage of the value that has built up under their roof over the years.
The popularity of equity release plans has seen its strongest growth rate in seven years, allowing homeowners aged over 55 to release a tax-free cash lump sum from the wealth tied up in their property.
And as the money can be spent on anything, many retirees use the windfall to enjoy later life to the full, pay off debts or even help family members and children with their own finances.
In fact, recent research from over-55s finance specialists Key Retirement found that one in five retired homeowners helped their families out financially after releasing equity from their home, with many gifting more than £39,000.
The most popular type of equity release plan is a lifetime mortgage, which typically has no monthly repayments to make as the loan, plus roll-up interest, is repaid when the plan comes to an end.
Homeowners looking to take advantage of their property wealth also now benefit from record low interest rates for equity release plans, with a new fixed rate of 3.53 per cent annually for a fixed lifetime mortgage.
Lower interest rates mean a drop in the amount of interest accrued over the life of a plan, essentially saving money for homeowners who opt for equity release.
Dean Mirfin, technical director at Key Retirement, said: “Record low rates mean that, for those looking to release equity from their homes, there has never been a better time to do so.
“With more than 70 different loans now available it makes getting quality, whole-of-marketadvice essential in finding the right deal.”