Last year, homeowners released a whopping £3bn in equity from their homes. That’s a staggering amount according to the Equity Release Council who is the trade body for the equity release sector. They reported over 37,000 new customers signing up in 2017 alone and the figure is increasing.
As the British population faces increasing financial pressures and we are living for longer, retirement can offer a new phase to be thoroughly enjoyed. Older homeowners are capitalising on the opportunity to free up some cash as it offers an exciting opportunity to take time to reflect on your needs and aspirations for the future.
One of the most common items in the ‘dream shopping basket’ is the gifting of money to help children and grandchildren, with the average sum of £33,000 being given to loved ones as an early inheritance. Money is commonly used to help with the birth of a new arrival, weddings, education costs and house deposits.
Other typical items purchased with the capital released are:
- Home improvements
- Paying off existing credit card debts and loans
- Big ticket holidays
- New car
- Holiday home
- Day to day living such as later life care, emergency funds etc.
- Gifts to help with new arrivals
It can be reassuring to know that you have a pot of money available to you to access, giving you the option of drawing it down in either a tax-free lump sum or in smaller chunks that can be used to top up your income.
Whilst the pound signs may flash before your eyes, it is however, very important before making any big financial decision to seek the right advice from a either a solicitor, professional advisor or both.
Important points to consider
- Equity can be released in a tax-free lump sum or in a series of smaller cash injections that can you used to top up your retirement income.
- Make sure you get professional advice from a specialist advisor or lawyer when considering equity release.
- It is helpful to remember that releasing equity from your home does reduce the value of your estate that you are able to leave as an inheritance.
- Be sure to check your position with regards to any state benefits you are claiming and your tax position.
- It is important to stay abreast of the market value of your property and this can fluctuate and could be higher or lower than its current value at time of equity release.
If you are over 55 years of age and own your own home, why not take a peek at what capital you could potentially release from your home by using an equity release calculator . This will give you a quick summary of what may be available to you.
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