Having somewhere to call home is important, and getting your children, and maybe even grandchildren, onto the property ladder is an important goal for many families. If you want to support family members financially, using your savings or giving away a portion of your budget may seem like the only options available.
Can helping family cause financial strain?
Research shows the UK’s over-55s are, on average, £18,000 worse off after providing financial support to their loved ones – a figure that demonstrates how you could end up in an uncomfortable position, particularly if you are retired or approaching retirement.
If you are looking for a way to make a sizeable contribution towards a loved one’s deposit, your property wealth could be the solution.
Helping family by releasing property wealth
If you are a UK homeowner over the age of 55, your property wealth can play a part in assisting the ones you love.
A lifetime mortgage, the most popular form of equity release, allows you to access a portion of your property’s value as tax-free cash. This can be used to help your loved ones, with anything left over to be spent however you wish. Be it seeing the wonders of the world or making dream renovations to your home, a lifetime mortgage can help you do it.
How can a lifetime mortgage be used?
Retirees Margaret and David Taylor took out a lifetime mortgage when their adult children required financial assistance to get ahead.
Their son John needed a sizeable deposit contribution to get out of the rent trap, while daughter Amy required support to save for her impending wedding. It was all too much, too quickly for Margaret and David’s savings.
Access equity tax-free
Having taken the advice of a qualified equity-release financial adviser, the Taylors decided that releasing some of their home’s value with a lifetime mortgage was right for them.
A lifetime mortgage enabled them to access their equity tax-free, and they would remain the sole owners of their home for life. Better still, because they were using an Equity Release Council–approved lender, they would never owe more than the value of their property, and there were no required monthly payments.
Drawdown liftime mortgage
David said, “After looking at all the options, a drawdown lifetime mortgage was the best choice. It gave us the flexibility to only take what we needed, but also made sure we could draw down more in the future. After helping the kids, and seeing them achieve their ambitions, we even had enough left over for a holiday.”
With a drawdown lifetime mortgage, Margaret and David were able to release a portion of equity while leaving a percentage in an interest-free reserve. Now, they could enjoy seeing their legacy in action while having funds left over – without accruing interest on it. Next time they want another holiday or to do some work to their home, they can.
More equity release options
Lifetime mortgages have become an important tool in the hands of over-55 homeowners looking to lend a helping hand. Low-interest rates and increased product diversity means you have more options and access to favourable deals. The loan can be repaid through the sale of your house when the last deed-holder passes away or moves into long-term residential care. Plus, there are no required monthly payments, and you retain full home ownership for life
Is equity release right for me?
When releasing equity from your home, make sure you understand your current financial situation and how it might change in time. Using a portion of your home’s value now may reduce the value of your estate in time and could affect your entitlement to means-tested state benefits.
There are a wide range of plans available to suit your individual circumstances and lessen the impact. Ask an adviser for a personalised illustration so you can understand all the different types of plans available.
A more comfortable retirement
Supporting your family doesn’t mean settling for less in your retirement – increasing your tax-free capital with a lifetime mortgage can help you lend support and achieve the comfortable retirement you deserve. To find out how much equity you could release, why not use our quick and easy calculator right now?