Freeing Up Extra Money

Home is where the heart and tax-free wealth is!

Preferring to remain in their own homes for as long as possible is, for many people, increasingly becoming an important part of how they view older age. There may be several reasons for this: to keep the family home, stay close to friends or remain in comfortable and familiar surroundings.

The majority (80%) of over-55s questioned in a recent survey said they would opt for equity release instead of moving home[1] and downsizing.

Choosing not to downsize

In addition, of more than 1,000 UK adults who have taken out equity release, nearly one in ten (9%) said the reason they chose not to downsize was because of the cost associated with moving, including stamp duty.

The average cost to buy and sell a property in the UK was £10,2101[2] – this includes an average bill of £1,800 for Stamp Duty.

Physical and emotional stress

Moving comes with both physical and emotional stress, and many older people are afraid of leaving behind beloved neighbours and a family home full of memories. Add the fear of the unknown to those concerns and a move to senior living can be overwhelming.

For an increasing number of people, property, often the home they live in, is also the answer to freeing up extra money, either to supplement income in later life or to gift to loved ones.

Negative equity guarantee

The research suggests that the emotional aspect of remaining in your home is what leads many to opt for equity release. A lack of supply, the pressure of moving and the costs of downsizing mean for many, it is not always a practical choice.

71% of people claimed the ‘no negative equity guarantee’ influenced their decision to take out equity release. All equity release plans which are approved by the Equity Release Council include what’s known as the ‘no negative equity guarantee’, which ensures those releasing equity will never owe more than their home’s value.

Supporting lifestyle in later life

While downsizing can work in both a practical and financial sense for some, the ‘no negative equity guarantee’ means remaining in your home is a viable choice for many looking to use the value of their property to support their lifestyle in later life.

Equity release can be a financial lifeline for older people who find themselves in need of cash, often living on small incomes despite living in properties worth hundreds of thousands of pounds. More and more people are using equity release to help enjoy a comfortable retirement, pay down debts, boost their income or plan capital expenditure.

Source data:
[1] Standard Life and Age Partnership clients were emailed with an invitation that contained a link to an online survey. 1,084 customers took part in the survey.
[2] – 2018

Equity release products involve borrowing against or selling part of your home. There may be more suitable methods of raising the funds you need.
A lifetime mortgage can quickly erode the remaining equity, and as a result there may be no value left to pass on.
Equity release may require a lifetime mortgage or home reversion plan.
To understand the features and risks, ask for a personalised illustration.

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