Why people use Equity Release

I’m often asked what are the most popular reasons for people releasing equity from their homes. Most of our customers and potential customers fall into the category of being asset rich but cash poor. Many of them are coping with day to day living, but there’s no margin for bigger spending like home improvements or replacing an ageing car!

That’s where Equity Release can unlock some of the accumulated value in your home.

One of the most regular requests is for home improvements. Bathrooms and kitchens are usually on the list, conservatories and new driveways are popular together with redecoration and garden landscaping! Oh, and you don’t usually have to provide receipts or estimates.

Gifting to family members. This can be for any reason but most popular is to help them get on the property ladder, pay for grandchildren’s education costs, or in current circumstances, to provide a sum of money just to help them out. Or it could be just to provide for an early inheritance so mum and dad can see their children benefit during their lifetime.

An increasing trend is to repay an existing mortgage and other debt consolidation. There are so many people with interest-only mortgages who need a way to repay because the lender wants their money back and won’t renegotiate terms.

One of the benefits of using a Lifetime Mortgage is that you can stay in your home for life. You can service the debt in full if you want and stop paying when you want. (Please see your personal illustration for full details). Unlike a conventional mortgage, there is no threat of repossession as no repayments are expected.

Of course, you could sell your home and downsize and this is an option I always discuss with my clients. However, recent surveys show two interesting facts. Most homeowners are now over the age of 55 and that the over 45s now buy houses with the intention of staying in them for life. They perceive the value of the home is as important as it’s utility.

Finally, a Lifetime Mortgage is only dependant on two factors. The age of the younger applicant if joint and the valuation of the property. There are no income and expenditure, affordability and stress testing, and previous poor credit need not be an issue.

As always, think carefully before securing other debts against your home.