Home in on your wealth

IF YOUR MONEY IS TIED UP IN YOUR HOUSE, YOU COULD UNLOCK IT WITH EQUITY RELEASE

MANY pensioners are property rich and cash poor during retirement. They are turning to the cash tied up in their property to help fund a more comfortable older age.

The number of people unlocking their property wealth using lifetime mortgages shot up by 22 per cent last year, with a total of 27,534* new plans agreed.

A record £2.15billion* was released from the value of their homes, according to the Equity Release Council.

ADVICE

Equity release provides a way of boosting pension incomes, while still allowing you to live in your home for the rest of your lifetime.

But while it can work for some people, it’s not the right move for everyone.

Like any major financial decision you need to ensure you understand fully how equity release will affect your situation. That means you should seek specialist advice before signing up.

LUMP SUM

Releasing cash from your home will give you a taxfree lump sum, or the potential to release money as and when you need it.

You won’t have to come up with any regular repayments because the loan secured against your home is repaid when the property is sold. With equity release you can manage the risk of ending up in negative equity. With some plans you can also ensure you leave some inheritance for your dependents. But there are downsides to equity release that could limit your financial choices in the future.

CHARGES

The value of your estate will be reduced and taking out an equity release plan may affect your entitlement to state benefits.

The debt will grow over time as interest charges keep adding up over the years of the plan.

Early repayment charges may apply if you choose to repay the loan early.