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Is Equity Release a Wise Move?
Equity release has changed in recent years but it seems as though more people over the age of 55 are deciding to take advantage of the money they have tied up in their homes. This is a trend that is growing and is showing no signs of slowing down.
In 2018, lending increased considerably, especially when compared to the previous year and it is almost double that of 2016. In the UK, much of the elderly population are not secure when it comes to their pension and so, the growth in equity release has been put down to this. However, there has also been an increase in the number of equity release products available and that could be playing into this change of approach. Therefore, homeowners have the ability to slowly release money from their property as opposed to releasing a lump sum.
So, are there risks?
Releasing equity comes with a pretty dire reputation. In the past, there have been claims that people have been mis-sold it and there are those cases where inheritance has been affected by the fact that equity has been released.
Due to the way that interest grows throughout the years, it can mean that people are left owing a huge amount of money that is effectively paid back from the value of the property once an individual passes away or goes into care.
So, equity release can be a feasible option but that does come down to the individual situation of a person and their financial and personal circumstances.
The reality is that people should always seek reliable and reputable financial advice prior to making any decision. What’s more, they should also speak to family members before they release equity. The right advice can help to make the right decisions and ensure that everything is in place while it might become a possibility to identify other options. This is where financial advice can really be worth its weight in gold.
Essentially, releasing equity can really help to offer crucial support during retirement, especially when it aligns itself with pensions, savings and other types of assets. For most, a home is the largest asset that anyone will ever own and so, it is always worth considering whether it can be used to fund retirement. However, later in life, downsizing is always a worthwhile option as it is a great way of releasing money that is tied up in your property.