To be eligible for equity release you must be the minimum age of 55 and typically own your own home to the minimum value of £70,000. Equity release is particularly popular with people who are retired and claiming their state pension, with maybe an extra monthly income from a private pension too. Whilst this retirement income helps those to live comfortably, it’s often not enough for many, with some pensioners scrimping and scraping to even cover their utilities and basics.
What is equity release used for?
Equity release can be used for so much, from clearing a current monthly-repayment mortgage to simply taking the holiday you’ve always dreamed of – most reasons come back full circle and enable you to make lifestyle choices that give a better quality of life during retirement.
In summary here are some reasons people use equity release.
- Credit card debt –so youdon’t have the hassle of monthly repayments
- Loaning money to children that need it – maybe to purchase their own house
- Travelling – taking luxury holidays that you’ve never had time to take
- Home improvements –fixing up your home and garden to really enjoy it in later life
- Stop working and retire sooner – if you have a lot of equity in your property you may wish to retire a few years early.
- Pay-off your current repayment mortgage –this can be done with some lifetime mortgage products
- Short-term care – covering the cost of immediate care that is needed
All these reasons are very real to many people, but the best advice for equity release is to not over borrow. If you release equity for say, paying a credit card debt of £15,000, only take what you need, and the older you are the better, because the interest just compounds and compounds.
Always seek independent financial advice and look at all other options to see if there is a less costly alternative. In the instance of credit card debt, maybe a balance transfer or paying off the highest interest rate first could be a better option for you.
Also Read: Is Equity Release a good idea?