Have you considered equity release to secure your retirement?
Securing your retirement is one of the last things people think about. A third of UK residents between 25 and 35 do not have a secure retirement plan. This article is for you if you find yourself in a position where your retirement looks dull. Discover how to quickly secure your retirement and avoid these equity release providers simultaneously.
What is equity release?
Equity release is a financial plan where you unlock cash from your property to use during retirement.
There are two equity release plans: a lifetime mortgage and a home reversion.
A lifetime mortgage allows you to live in your home while a percentage of the property value is paid in either monthly instalments or a lump sum.
When you die, your beneficiaries will have the option to sell the house to pay the lender, or they can pay the lender the balance by other financial means over a 1month period.
A home reversion plan is where you sell a percentage of the property to a lender and when you die, the lender sells the property to recover the costs.
Whatever is left of the sale will then go to your beneficiaries.
Who can get equity release?
Anyone over the age of 55 can apply for equity release.
As long as you pass the lender’s credit checks, you can apply for equity release.
Some of the checks include:
- A healthy credit score
- You need to be a permanent resident of the UK
- You need to be between the age of 55 and 65
- You need to prove a history of employment
What are the benefits of equity release?
There are many benefits to equity release.
Clearing old debt and ensuring a good retirement income is one of the more critical things to do.
There are no limits to how you can spend the money you get from equity release.
Many people who successfully take out an equity release mortgage use the money to pay for their children’s or grandchildren’s education, renovate their homes or go on long-awaited holidays.
How can I release equity in my home if I’m 55?
You can release equity in your home when you are 55 by preparing for it at 53, according to our equity release expert, Aaron Page.
Speaking to a financial adviser is the key to planning your retirement and what you will need to do to prepare yourself for it.
Once you have a plan for how you will spend the money, you can start looking at lenders and brokers.
Is equity release the answer to your pension shortfall?
Yes, equity release can answer your pension shortfall by giving you the funds you might need to live comfortably.
You will be able to tap into the money you have saved on your property without needing to move from your home.
Common questions
Are equity release rates still high?
Yes, equity release rates can be high.
Equity release rates are set between 3 and 7% for life.
If you have covered enough time on the repayment period and wish to change lenders to bring down the interest rate, you can consider doing so after the first 3 years.
Should you release equity in your home or remortgage?
You could remortgage or release equity if a financial adviser helps you choose the best choices for you.
You could remortgage and release equity at a later stage.
Conclusion
Retirement is the time you should spend resting and enjoying the things you have worked for, but without a steady plan, it can be stressful.
An equity release plan can ease that tension and help you do everything you need to ensure your retirement is comfortable.
Speak to a financial adviser about your options before you apply.
