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How Does Equity Release Factor Into Retirement Planning?

Own a property, but require additional retirement income or savings? Equity release could be a viable choice for your retirement plans. Read on, to understand how equity release works in the context of retirement.

How do I tap into home equity in retirement?

There are two primary methods to consider: 1. a lifetime mortgage, and 2. a home reversion plan. With a lifetime mortgage, homeowners can release a portion of their home’s value. It’s important to note that individuals are required to be over the age of 55.  A home reversion plan differs in that it requires the youngest applicant to be at least 65 years old to be eligible.

How does home equity factor into retirement planning?

With a lifetime mortgage, a loan is secured against your home, providing you with either a tax-free lump sum (a drawdown), or the flexibility to withdraw funds in installments. It is possible to opt for a lifetime mortgage, even if your existing mortgage isn’t fully paid off, providing the funds are used to settle the mortgage, or any existing mortgage is repaid from other funds. Alternatively, a home reversion plan constitutes the second major type of equity release, involving the sale of all or a portion of your home to a home reversion provider. In exchange, you’ll receive a lump sum.

How do you leverage home equity in retirement?

There are two equity release options: 1. the lifetime mortgage, where you secure a loan against your primary residence while still maintaining ownership. And 2. home reversion, where you sell a portion or the entirety of your home to a home reversion provider, and in exchange, receive either a lump sum.

Should I include home equity in retirement savings?

Unlocking your home’s value is a significant step, requiring careful consideration and expert financial advice. Seeking guidance from a financial adviser who is an equity release specialist will help you assess whether equity release aligns with your needs and objectives, explore alternative options, and determine the most suitable form of equity release for your situation if it is suitable.

How does retirement equity release work?

Equity release can empower certain individuals aged 55 and above to access tax-free funds from their home’s value. The released amount depends on both your age, health and the appraised value of your home. Your choice of equity release determines whether you receive the funds in a single sum, or as multiple smaller lump sums over time or as smaller sums taken as and when you need them.

Is equity release a good idea in retirement?

Determining the suitability of equity release hinges on your situation and financial objectives. If you possess substantial property wealth and require additional retirement income, equity release could be a viable choice however you should take advice from a qualified equity release adviser that is a member of the Equity Release Council before deciding. 

For further information or if you have any questions, feel free to get in touch with Bower on 0808 169 8316. Alternatively, you can request a callback, send us an email, or message us through the live chat on our website.

Bower provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,495 be payable.

To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668request a call backemail us, or join our live chat you’ll find on our website.

If you are considering equity release, we strongly recommend that you read our ‘Advantages and disadvantages of Equity Release’ page carefully and talk to one of our specialists before deciding if you wish to proceed.

Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will affect potential inheritance and your entitlement to means-tested benefits both now and in the future.

Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property.  To understand the features and risks, please ask us for a personalised illustration.