Generally, people aim to pay off their mortgage as quickly as they can. Yet in some cases, this is either impossible or inconvenient. If you’re over the age of 55, you may find the possibility of releasing equity interesting. In the case of releasing equity, you can access some of the money tied up in your property to use as you wish.
Below, we list the top reasons people apply for equity release, and what it can be used for, as well as why you should or should not consider it.
Increased income or care payments
It’s not a subject people like to think about, but elderly care may eventually become a necessity. If you don’t have enough money to afford the appropriate care, applying for the release of equity may be the right option for you. In this situation, you either take out a new lifetime mortgage or sell some of your property to a home reversion provider. In both instances, you can secure some of your assets for inheritance. The rest will fall under agreements with the provider you selected. Either way, you can then apply to receive your money in either a lump sum or smaller payments to help pay for care or additional needs
Payment of debts and bills
Releasing equity can help pay for any outstanding debts you have accumulated, for which you do not otherwise have the cash. By applying to release equity on your home, you’ll be able to continue living in it but free up some funds to pay your creditors. This is particularly beneficial when you keep accumulating fees and interest and can help reduce these drastically, while also lowering stress. It’s no secret that continually seeing bills you can’t pay and watching debt accumulate is unhealthy. In this instance, releasing equity on your home can definitely be the best decision for you and your family. It can help you pay for debts and bills and also safeguard your mental health in some respects. With that said, releasing equity is also not free, and speaking to a legal expert is absolutely essential.
Home improvements and adjustments
Finally, and perhaps the most positively, releasing equity from your home can help you pay for home improvements and adjustments. For example, you may require a more suitable shower room or appropriate stairs to use later on in life. Releasing equity is much the same as getting a new mortgage, although you receive the assets that were already invested back in cash, be that in one big sum or in smaller ones over time. This may be valuable if you either wish to improve your home or if you vitally need to do so due to poor health.
Should you consider releasing equity on your property? It can be a way of accessing money you need in retirement, although it is expensive. As such, releasing equity on your home should ideally only be considered if other options have already been exhausted. Releasing equity on your home is helpful if you have debts that urgently need to be paid, require important home improvements to accommodate ill health or physical problems, or to access funds to pay for care or a more comfortable retirement. In all other instances, other options may be better suited and hence preferable.