Retirement is supposed to be the golden period when you should be able to reap the benefits of your working life. But as people live for longer and the cost of living increases, financial planning during retirement is becoming more and more significant. There are thousands of pensioners across the UK without enough cash to support their lifestyle during retirement and they are looking towards equity release plans for a solution.
Real estate prices have soared since the 1990’s and houses are essentially pots of gold waiting to be opened. But a house doesn’t turn into usable money unless it’s sold, and this is exactly where equity release schemes come into the picture. Equity release plans address this issue by allowing older homeowners to release some of the value built into their property and using it as cash.
Different people have different reasons for releasing equity from their home. Some people need more money to support their lifestyle after retirement, and equity release plans allow them to supplement their pensions for more comfortable monthly income. Others may need extra cash for a specific one off expense. This could be anything from building a conservatory, buying a car, or an international dream holiday!
Another important expense during old age can be paying for home care. Some people who require permanent care prefer living in their own homes instead of moving into a care home. As long as the owner is living in their home, the equity release scheme can remain in place. So an ER scheme can be used to pay for the provision of care as long as you’re living in your own home.
Equity release plans need to be closed once the owner has died or moved into a permanent care home. In case of joint applicants, this applies to the second applicant. So the house can only be sold when both the applicants have either died or moved into care. As such, ER can also be used to support paying for care in a care home, as long as the second applicant continues to live in the property.
Releasing equity can be a good option for those who own a property, and wish to increase their income or raise money for a particular cause. Equity release plans work for some and don’t work for others, so they need to be considered carefully before taking a final decision.