Could equity release help to fund your retirement?

More and more people approaching retirement are looking for alternative ways to fund their golden years. Could equity release form part of the plan?

Since 1908, the traditional way to fund retirement was with a pension, but with the financial uncertainty that 2020 has brought, many are now wondering how to make the best use of their money and find ways to top up their monthly income.

Why equity release?

With a lifetime mortgage, the most popular form of equity release, the money that you access from your property is tax-free and you still continue to own 100 per cent of your own home.

This popular retirement finance solution has brought with it huge development in plans, meaning many more options for you to consider.

All equity release plans come with a nonegative-equity guarantee, meaning that you won’t pass on debt, providing your home is sold for a reasonable amount. Plus you have the option of protecting a percentage of your property value for your loved ones with inheritance protection.

Some plans now offer the option of making repayments, this can mean that you don’t accrue as much interest on the money that you have released. The repayment options can be flexible, depending on your circumstances.

You may be thinking about equity release but don’t know what to do next.

Read our step-by-step guide to find out what’s involved and where to turn for advice.

Step 1

Have an understanding of what you would like the money for. The lowest amount that you can release is £10,000 and the maximum amount depends on the age of the youngest homeowner and the value of your property. The absolute maximum that anyone could release is 55 per cent of their property value. Once any outstanding mortgage has been repaid, the money that you release is yours to spend as you wish.

Step 2

Contact a specialist broker who is qualified to offer equity release advice. Some advisors are tied to particular products, but through the Mail Finance Equity Release Service you will get access to advice from the whole of the market.

Step 3

Organise a quotation to discuss your borrowing needs. Through the Mail Finance Equity Release Service you will be provided with a quote free of charge and

without any obligation for you to proceed. Only if you then choose to proceed and your case completes would a typical fee of 2.25 per cent of the amount released be payable (minimum £1,695).

Step 4

Your advisor will help you understand all of your options. They will also ask you to consider alternative methods for accessing the money that you’re looking for, such as downsizing to a smaller property.

Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property. To understand the features and risks, ask for a personalised illustration.

Equity release requires paying off any existing mortgage. Any money released, plus accrued interest, is repaid upon death or moving into long-term care. Even if your current plan has early repayment charges, there could still be savings to be made because of the current low rates. It is worth taking advantage of the free plan review, as you’re under no obligation to go ahead with anything that is suggested to you.

Your free plan review could also be the perfect opportunity for you to access more tax-free cash and you may also want to take a look at some of the new plan features that may not have been available when you first took out equity release, such as:

The option to access your tax-free cash as an income rather than a lump sum

Greater alternatives for how and when you choose to make repayments

The ability to access a cash reserve at a later date, so you’re not accumulating interest on money that you don’t need right now During the free review the advisor will let you know if switching plans is right for you, providing you with the full information, including discussing whether you qualify for the latest plan developments.

The amount outstanding on your equity release plan, including any interest that you have accrued and any potential early repayment charges, will also be talked through. They will also discuss what impact equity release could have on the amount of inheritance you can leave and how it could affect your entitlement to means-tested benefits, either now or in the future.

TO FIND OUT MORE INFORMATION ON NEW EQUITY RELEASE PLANS AVAILABLE AND TO REQUEST YOUR FREE PLAN REVIEW, CALL US ON 0808 239 8858, OR VISIT US AT WWW.MAILfiNANCE.CO.UK/REVIEW.