It’s natural for parents or grandparents to want to help their children or grandchildren later in life, especially when it comes to getting a foot on the property ladder. However, finding the cash to help younger relatives buy a home can be difficult, given a lack of regular income and reluctance to dip into the pension pot or other savings. That’s why equity release can be a good option.
If you are looking to raise cash to help younger relatives with a deposit or other costs associated with buying a new home, it can be difficult to know where to turn. By the time we reach pension age, most of us will be on a fixed income, and that income may be dependent upon money that we have invested or saved. Drawing from that pot could therefore reduce the amount of regular income received. Other options, such as taking out a secured or unsecured loan, may not be practical due to lenders’ affordability assessments and limited income. If these other options are unavailable, or are not the best course of action for your individual circumstances, taking out an equity release plan to free up some of the cash value of your home may be the way to go.
Equity release is essentially a means of utilising your bricks and mortar as an additional “pot” against which you can draw cash. It has a number of advantages over other types of secured or unsecured borrowing. For one, the loan is granted based on the value of your home, rather than an assessment of your ability to afford monthly repayments. In fact, in most types of equity release plan, there are no monthly repayments. The amount you draw is secured against the equity of your property and you can continue living in your home until you die or move into permanent residential care. The policy provider is then repaid the amount you borrowed and any interest accrued on the sale of the property.
While many people of retirement age choose to remain in the same home for the rest of their lives, equity release doesn’t tie you to the property. All equity release plans sold by providers approved by the Equity Release Council are portable, meaning that you can move home if you so choose, subject to certain conditions. The Equity Release Council also provides other protections, including the “no negative equity guarantee” – this means that while interest will accrue on the amount you have drawn for the remainder of the time that you live in the property, you will never owe more than the total value of the property at the time it is sold.
There is a wide variety of equity release products on the market, and they can be complicated – so equity release isn’t something that should be rushed into. Here at Premier Equity Release, we have qualified advisers experienced in helping homeowners use equity release to free up the cash value in their homes. We can offer the expert advice you need on funding your family’s future. Get in touch with us today to discuss how we can help.