Equity release offers solution for homeowners who don’t want to downsize
For many older homeowners looking to increase their retirement income, downsizing is one option to investigate. However as Andrea Rozario, Director General of the Equity Release Council (ERC), highlights downsizing can have an “emotional impact” on all those involved.
While moving to a smaller property may seem a sensible choice on paper, and in fact be the best option for many, for others the idea of leaving the family home, their neighbours and all their memories is an incredible upsetting concept.
It is for these people for whom equity release could be a preferred option.
Allowing you to release funds from your property, an added benefit of an equity release scheme is it allows the homeowner to remain in their property for the rest of their life.
Equity release activity has steadily increased in recent years, a trend which many are expecting to continue as more and more people approach retirement with money still owing on their mortgage.
Figures from Key Retirement Solutions have shown 18 per cent of people have used equity release to clear their outstanding mortgage, as Andrea Rozario explains:
“While it is essentially ‘refinancing’, it does mean that they do not need to make monthly repayments and therefore have a higher disposable income.”
It is estimated nearly half a million people in the UK may not have paid off their mortgage when they decide to retire. This is due to numerous reasons including remortgaging on a regular basis and buying property in later life.
Content correct at time of publication