What does equity release have to offer?

Chris Torney / 03 November 2016

Looking to boost your retirement income? Perhaps you should consider equity release…



Many older people who are looking to boost their retirement income consider equity release, and such schemes have become increasingly popular over recent years. 

So what does equity release have to offer?

Is equity release the right option for you?

1. You can stay in your current home

Equity release allows you to raise money from your home without having to move to a smaller, less expensive property. 

While downsizing in this way means you can generate some extra cash without having to borrow, many people are understandably reluctant to leave the house they have lived in for decades.

What should I consider before downsizing?

2. You can take advantage of rising house prices

Anyone who has owned a property in the UK for many years and has paid off most or all of their mortgage is likely to have a significant amount of equity. Equity release is a way of tapping into this wealth so that you can benefit from it now without having to sell.

And if you stay in your current home instead of moving to a cheaper property, you will be able to benefit to a greater extent from any future house price rises.

How much is my house worth?

3. You can still leave an inheritance

Equity release is likely to reduce the amount of inheritance you can leave to your family – that’s why it is a good idea to discuss your plans with relatives before signing up.

However, there are ways you can guarantee some level of inheritance, for example by using a home reversion plan, which means you sell part of your home to an equity release company but retain ownership of the rest.

Should you leave your money to your children or spend it now?

4. You don’t have to pay anything yet…

Typically, equity release customers don’t have to pay back any of the money they owe for many years – usually debts are only settled when the property is sold after the customer’s death.

You can choose to pay off your interest bills on a monthly basis if you like, however: this means that interest won’t keep compounding every year and you – or your family – will never owe more than you originally borrowed.

5. You can take money out of your home as you need it

Equity release doesn’t have to mean you take a large lump sum upfront. A lifetime mortgage with a drawdown option means you can take a regular income from your home with the ability to increase or reduce the amount released later on.

Another advantage of this approach is that it helps keeps interest costs down, because you are only charged interest on the money you have actually released.

Use our equity release calculator to see how much money you could potentially release from your property: Calculate

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.