Could equity release help you get the most out of your retirement?

Updated December 2019.

New research suggests that 2018 was a record year for equity release, with sector hitting £4 billion for the first time and a 6% increase on this during the first 3 quarters of 2019. Sarah Cowley Head of Coodes Solicitors’ Residential Property team comments on some of the benefits of an equity release mortgage.

Figures from the Equity Release Council reveal a 32 per cent increase in retirees aged 75 to 84 taking out equity release loans since 2017. This follows on from a 48% increase in the preceding year showing the market continues to be strong. The number of products available doubled in August 2019 compared to the previous year and has dramatically changed from 27 options in August 2014 to now 287 options. More people are taking advantage of these loans to fund their basic day-to-day living costs and help them enjoy retirement to the full.

Sometimes called ‘lifetime mortgages’, equity release mortgages are available to homeowners aged 55 and over. They can make a substantial amount of cash available as a lump sum or a regular income to support you in your retirement.

How equity release can help to fund your retirement

Equity release can be a good option if you are coming to the end of your term with an interest only mortgage and have no means of paying it off. It can also unlock the wealth held in your housing and boost your retirement finances.

Many people look forward to their retirement as the time they will be able to follow their dreams, whether it is travelling the world, making home improvements or buying your ideal car. With younger people finding it harder to get onto the property ladder, many are now also using equity release to help children or grandchildren buy their first home.

Understanding your options

There are two main types of equity release products. A lifetime mortgage is very similar to a standard high street mortgage. You continue to own your home and your name remains on the title deeds. The difference is that there are no monthly payments.

A Home Reversion Plan involves selling a percentage of your property in return for a lifetime lease. This allows you to stay in the property rent free. When the property is sold the proceeds are divided between the lender and either you or your estate.

There are many benefits to taking out an equity release mortgage. It is a way of getting control of your finances and enjoying what you’ve worked hard for. The key is to choose the mortgage that fits with your needs. For example, most of these mortgages enable you to move home but it is important to get advice before you sign anything.

Getting the right advice

It is a common misconception with mortgages that you must use the provider’s own solicitor. In fact, you can choose any solicitor you like.

There is no reason why you can’t choose your local law firm to advise you on your mortgage. Coodes specialises in equity release schemes and will help you to fully understand the implications of the plan you are taking out. We will ensure it complies with the Equity Release Council’s SHIP Standards and Code of Conduct and that it is safe and reliable. Our priority is to ensure you are fully informed and protected so that you feel confident in your choice.

For advice on these issues, please contact Sarah Cowley in the Residential Property team at Coodes Solicitors on 0800 328 3282 or sarah.cowley@coodes.co.uk