Equity release is a way of utilising the money tied up in your property without having to sell it and move to another home. The money is repaid at a later stage for example, when you pass away, move into a care home or sell your house.
It can be an option to enable you to free up some money to make life easier, maybe to carry out improvements to your property, go on holiday, buy a new car or make a gift to family members. For example, helping with university fees or giving financial assistance to help them get on the property ladder. In other words, equity release can give you the financial freedom which would otherwise not be possible.
Equity release is generally designed for people over 55 who have paid off their mortgage, or who only have a small proportion of it left to pay, and can therefore use this equity as a means of securing a loan usually a lump sum for which the repayment is deferred.
It is an increasingly popular choice with over 82,000 people making use of property wealth during 2018, according to year-end market figures from the Equity Release Council, the sector trade body. The popularity of equity release over the last 10 years may be due to a squeeze on household budgets as it becomes harder for retirees to depend on savings and pensions.
However, although undoubtedly an attractive option, it is definitely not something which should be entered into lightly. You should always seek independent financial and legal advice before proceeding.
Our property team are experienced in equity release and can advise on the legal process and commitment you are making by taking out an equity release product.