If you need a secure cash injection in later life, then equity release can be an excellent option. This is where you release a proportion of the value of your home – or another object with capital value – while still living there.
There are different schemes you can use to complete this, but they all share the goal of providing you with stable financing. Below, we explore the things you should know about equity release.
How can equity release help?
Equity release can help by giving you a cash boost in later life. Whether you need help with care fees, paying off debts or if you simply want to live a more comfortable life, an equity release can help you.
Does equity release affect inheritance tax?
Inheritance Tax is calculated according to the size of your estate. By using an equity release, the value of your property is reduced and can lead to less Inheritance Tax payable. In some circumstances, your estate may fall under the Inheritance Tax threshold completely.
Are equity release rates rising?
Equity release rates have been rising of late, though. The average equity release interest rate was at 4.26 per cent in September 2021, with lenders offering flexible features that came with a higher cost for the borrower.
What equity release schemes are available?
The two main schemes available are lifetime mortgages and home reversion plans. With the latter, you sell all or part of your property. However, you will still retain a legal right to continue living in the property until you die or move into long-term care. The money from the sale can be paid to you either as a lump sum or as consistent income.
Meanwhile, you can also go for a lifetime mortgage. This is a more popular option. In this scenario, you borrow money to be repaid whenever the house is eventually sold. The loan is then paid off from the eventual sale of your home. Usually, you’ll borrow between 18 per cent and 50 per cent of the property’s value. Ultimately though, there are multiple equity release mortgage schemes that are available, consider professional advice before choosing one.
Equity release can help make your life more comfortable after retirement. By following the advice above, you should be all set to make a decision that can benefit you and your family.