Using equity release to fund your ambitions

Senior man sitting outside a table surrounded by family. There is a birthday cake in front of the man and he is kissing his wife. Everyone is very happy.

Retirement is meant to be a time of increased opportunity. With children having left home and reduced work commitments, increasing numbers of Britain’s over-55 homeowners are exploring options that boost their budget enough to enjoy the activities they’ve always dreamed of.

More and more are chasing their aspirations and seeing more of the world, whether it's from the comfort of a cruise ship cabin or the adventure of treetop trek in the rainforests. Britain’s pensioners are proving that far from being over the hill, they’ve got plans to get over the mountain. By using a lifetime mortgage, the UK’s most popular equity release product, they are able to securely unlock tax-free cash from their homes.

Record-breaking equity release  

The popularity of equity release is soaring, as more and more homeowners recognise that accessing their property wealth could provide them with the retirement they desire.

2018 saw a staggering increase over 2017, with £3.94bn being released as opposed to £3.02bn. This continued into 2019 with £3.92bn of equity being released.

Part of this growing popularity comes down to the freedom equity release provides. Once any existing debt secured against the property – such as an existing repayment mortgage – has been cleared, the remainder of the released money can be spent entirely as they wish. Common options include:

One of the most popular uses for the tax-free cash is to see more of the world. That’s exactly what Mr and Mrs Preston, retired finance workers, from Surrey did.

"There was still so much of the world we wanted to see, and now that we no longer work, we thought the time was right. We decided that making the most of our home’s value was a great way for us to finally do it. A lifetime mortgage appealed to us, because we were guaranteed to remain the owners of our home for the rest of our lives. Because we had a fixed interest rate plan, and no required monthly payments, we also knew how our mortgage would build up over time and the exact way our budget could be boosted Thanks to equity release, we have been able to relax on a Caribbean cruise, and later this year we’re planning a coast-to-coast road trip. Equity release has certainly broadened the horizons of our retirement, and we couldn’t recommend exploring it as an option to explore highly enough!"

Are you eligible for equity release?

Lifetime mortgages are specially designed to allow over-55 UK homeowners to convert some of their property wealth into tax-free cash. There are a number of qualifying criteria you must meet prior to releasing equity.

A home in the sun

It’s not just travelling abroad that equity release could allow you to do. Homeowners are similarly turning to their property wealth to help fund the purchase of a second property, with their bolt-holes in the sun offering them a better, more relaxed quality of life in their later years.

Steven Wilkie, managing director of Responsible Life, said: “What’s becoming more common are those looking to take advantage of their rising property value to help buy holiday homes. Consider how much property in London and the South East has risen and what this means you can now afford to buy in other more rural areas that are perfect for weekend getaways.”

Four key things to know about equity release with a lifetime mortgage

  • Choosing to release equity with a lender approved by the Equity Release Council ensures that you are protected by a number of important safeguards. These include the no-negative-equity guarantee
  • Releasing equity may reduce the value of your estate and could affect your entitlement to means-tested benefits. Your adviser will be able to provide you with a personalised illustration of the features and risks to you
  • There are a diverse range of products available, including mortgages that allow you to ring fence a portion of your equity to leave as a guaranteed inheritance.
  • You and your partner are guaranteed to retain full home ownership for life, until you both either pass away or move into long term care. This is where a lifetime mortgage differs from other equity release products, such as a Home Reversion Plan

Could equity release be right for you? Discover how much tax-free cash you could release with the Telegraph’s free and instant equity release calculator

The Telegraph Equity Release Service is provided by Responsible Equity Release. Responsible Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/) under reference 610205. Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,490.

The above article was created for Telegraph Financial Solutions, a member of The Telegraph Media Group. For more information on Telegraph Financial Solutions click here

Information correct at date of publication.