Can equity release help my parents fund retirement?
Retirement needs a lot of planning. Not everyone is in a position to add more to their plan than they already do. With an equity release plan, there could be light at the end of the tunnel, but is that light worth pursuing? With equity release rates from Nationwide, it can be easy to see why this is a good idea. Here we look at how equity release can help your parents fund their retirement and gain financial confidence as they grow older.
Should you use equity release to boost your retirement income?
Yes, you should use equity release to boost your retirement income.
You can choose a lump sum to pay off old debt and do home renovations, or you can go on a holiday you might have been thinking of.
A monthly instalment from an equity release plan would make it most accessible to manage bills every month and allow a form of comfortable living for those who may be frail or older.
What type of equity release is right for you?
There are 2 equity release plans to choose from.
One is a lifetime mortgage, and the other is a home reversion plan.
A home reversion plan allows you to sell a percentage of your home to a lender for a lump sum payment, and when you die, the lender will sell the house to recover its costs.
This plan would be great for anyone who doesn’t have any beneficiaries.
A lifetime mortgage allows you to loan a percentage of the value of your home from a lender, which you can repay over 10 years.
If you die before the money has all been paid, your beneficiaries can choose to sell the house to recover the balance, or they can repay the lender with other financial means.
When is the best time to get an equity release?
Our equity release expert, Jason Stubbs, suggests getting an equity release plan when you are much older.
The chances of qualifying for one when you are close to 65 are far more significant, and the amount you receive is much higher.
Some lenders prefer people who have ailments and illnesses, giving them a higher percentage of the property value.
You can start doing your planning from the age of 53 and apply by the time you are 55.
Can I transfer my equity release scheme to a retirement home?
Yes, you can transfer your equity release to a retirement home.
As long as the provider has access to the property, you will be able to transfer your equity release.
Common questions
Can I move home after taking out equity release?
Yes, you can move home after taking out the equity release.
Your remaining balance will move over to the new property, and your lender will carry on your agreement as before.
Can I sell my house if I have an equity release?
Yes, you can sell your house after taking out the equity release.
If you are not buying another property., you can repay the lender and keep the balance of the sale to yourself.
How does the transfer of equity release scheme work?
The company will have a mortgage criterion for you, which will work the same as it would if you were taking out an equity release for the first time.
Conclusion
There are many benefits to taking out equity releases to make retirement more accessible, and it would be fair to invest in it.
Look at your parents’ options before considering an equity release.
If the homeowners intend to live with their children, it might be best to discuss which equity release plan would work or if it is necessary.
