Are you worried about having enough money to live comfortably in retirement? You might be able to unlock some of the value of your home, and even save thousands in the process.
Equity release lets homeowners over 55 borrow money against the value of their property. This way, you can access cash without having to sell your house and move. The most common type is a lifetime mortgage, which is repaid from the sale of your house when you die or go into long-term care.
Why are people making repayments?
The good news is, many people are now making extra repayments on their equity release loans. These repayments are completely voluntary, and there are no penalties. In 2023, the average voluntary repayment increased by 30% from the year before!
This means that homeowners are saving a lot of money. The Equity Release Council says that these repayments will save people almost £169 million in borrowing costs over the next 20 years!
How much can you save?
The amount you can save depends on how much you can afford to repay each month. For example, someone who borrowed £60,000 could save almost £17,000 over ten years if they paid £100 per month. If they paid £200 per month, they would save nearly £34,000 over the same period.
What are the pros and cons?
Equity release can be helpful if you need extra money for things like:
- Retirement: Having enough to enjoy your golden years.
- Care costs: Paying for home care or care home fees.
However, there are some things to consider:
- Interest: Because you’re not making monthly payments on a lifetime mortgage, the interest keeps adding up, so you end up paying back more than you borrowed.
- Inheritance: Equity release will reduce the amount of money you can leave to your loved ones.
Who should I talk to?
You need to speak to a qualified equity release advisor before you make any decisions. The Equity Release Council can help you find an advisor in your area. Make sure the advisor is not restricted to recommending products from just one or two companies.
Making small payments can make a big difference.
If you’re thinking about equity release, it’s worth exploring whether making voluntary repayments could be a good option for you. This could help you enjoy your retirement even more. It’s all about making smart decisions with your money and your future!