Our first grandchild is joining the family in a few months. Can I use equity release to help them prepare for the future?
Congratulations on the upcoming addition to your family! Equity release can be a way to access value tied up in your home, helping you provide financial support for your grandchild.
Wouldn’t it be nice to have the funds to help with your own retirement needs and support your loved ones financially?
Traditionally, we leave the nest egg we’ve carefully built up, passing along property after we die. However, with more people living longer, it’s becoming increasingly common to help your loved ones. Sooner rather than later.
For example, say your children are having to look for property further away to afford a home of their own. Then you heard about equity release.
A lifetime mortgage could help unlock £££ from the value of your home, helping your family get on the property ladder and keep the family nearby. It can also free up other costs associated with having a baby, like buying cots, car seats, prams, etc.
Let’s take a closer look at the benefits of a lifetime mortgage:
- You can unlock cash from your home, tax-free, to help meet your needs in later life.
- You’ll always retain full ownership of your home and can stay in it for as long as you wish
- You can choose to make reduced or no monthly repayments to suit your circumstances
- You’ll never owe more than your home’s worth with a lifetime mortgage
- You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges
Now, the drawbacks:
- A lifetime mortgage is a loan secured against your home and subject to compound interest. Meaning the amount you owe can grow quickly
- Equity release will reduce the value of your estate. And may affect your entitlement to means-tested benefits
- Equity release may leave you with limited or no property equity remaining
- Equity release will reduce your financial options in the future
- A lifetime mortgage is a long-term financial product. It is not designed to be fully repaid until the death of the last remaining borrower; otherwise, early repayment charges may apply.
Is equity release right for you?
For homeowners aged 55 and over with a property worth £70,000+, it helps to release some of the tax-free cash from your property. However, it’s not right for everyone.
Factors to Consider
Releasing equity from your home will reduce the amount of inheritance you can pass on. It's important to discuss this with family members to ensure everyone understands the implications.
Lifetime mortgages can be a powerful tool for accessing the value of your home. But they require careful consideration. Use professional advice to ensure they are the right choice for your circumstances.
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SPEAK TO AN ADVISER
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice. A fee may be charged for mortgage advice. The exact amount will depend on your circumstances.
Source: https://www.keyadvice.co.uk/equity-release/why/take-care-of-family-and-friends