As houses increase in value so does the equity built up in them; and it’s that equity that older homeowners are releasing in order to improve the quality of their life in retirement.
For some, this improvement means having extra cash available to spend on regular holidays; for others it’s a way of funding a dream purchase such as a new car or motor home or even a trip of a lifetime. However, these are not the most popular reasons for releasing equity, according to new research. So, what are they?
Repaying a Mortgage & Consolidating Debt
Paying off a mortgage in retirement eases the burden of monthly repayments and increases disposable income. Currently one of the most popular uses of equity release, repaying a mortgage helps to free up cash to spend on enjoyable pastimes or quite simply, to make it easier to meet day to day living expenses. Consolidating debts is almost as popular, with many equity release plans being used to reduce monthly outgoings.
Helping Family and Friends
A large number of homeowners release equity from their homes so that they can provide financial assistance to family and friends. Helping children or grandchildren onto the property ladder by funding what is now an almost impossible to achieve deposit is one of the most popular gestures, although many are using the money to generally help their loved ones through the current tough economic times.
The long dreamed-of new kitchen; a refurbished bathroom; a light and airy conservatory to enjoy with friends and family: thousands of homeowners are realising the benefits of releasing the value they’ve built up in their property to allow them to make improvements to the home. And these benefits are not just lifestyle related as in many instances, home improvements can increase the value of a property.
Geoff Charles, Managing Director of Equity Release Specialists Bower, has this to say in summary: ‘Having invested hard earned money into a property over the years, homeowners deserve to use some of that money to live an enjoyable life in retirement. Whatever it is that provides that enjoyment; whether it’s improving the home, increasing disposable income so as to feel more comfortable financially, or making a helpful gesture to loved ones, anything is possible with equity release.’
Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks, please ask for a personalised illustration.
Bower is an FCA regulated independent financial advice company that offers specialist advice on equity release throughout the UK. For more information email [email protected] or call 0800 4118668. Bower offers a no obligation initial consultation to homeowners considering equity release.