Alternatives to equity release

Equity release can boost your income later in life. But there are lot of other ways to raise money in retirement. Let’s look at some ideas that might work for you.

Make a budget

Are you retired and finding it hard to live within your means? Budgeting can help. Look at your income and outgoings to see if you can cut back. For example, you could:

• Cancel subscriptions and direct debits you don't need.
• Look for cheaper mobile phone and utility price plans.
• Save money on your insurance policies.

You may not raise a large amount of capital. But you might make your income stretch a little further. The MoneySavingExpert website offers lots of budget advice.

Claim benefits

Not used to claiming benefits? You could be missing out on money you’re entitled to. Helpful website entitledto says about £15bn of benefits are not claimed each year. If you're not sure, you can use their free benefits calculator. Another way to check is with Saga Equity Release. Provided by HUB Financial Solutions Limited, the service offers a free benefits check with an expert.

Apply for grants

Some local authorities and charities offer grants to older people. These can be used to fund upgrades to your home, so you can continue living there. They can cover the cost of grab rails and ramps through to bigger changes. 

There are nearly 200 Home Improvement Agencies (HIA) who offer advice and support. Find your local HIA here or read more about the Independence at Home charity.

Use your savings

Do you have any savings set aside for a rainy day? You could use the money to boost your income instead of equity release. But as this can impact your taxes, it’s best to get financial advice first.

Not used to saving or investing? It’s never too late to start. And you might be surprised how simple and rewarding it can be. Here at Saga Money (provided by HUB financial solutions), we offer a range of savings products and investment accounts that may suit your goals. 

The value of investments can rise and fall. You could get back less than you invest.

Sell things you own

For many people, their home is the most costly thing they own. But do you have any other items you would be happy to sell?

From old jewellery to vintage clothes and rare records, you could be sitting on a hidden goldmine. A visit to the auction house or car boot sale could raise more money than you realise.

Find some paid work

You don't have to stop working later in life. You could get a part-time job or find a ‘sidehustle’. As well as earning money, you can keep active and meet new people. Many companies are now open to older people working for them. After all, you can’t put a price on experience!

Rent out a room

If you have space in your home, you could rent out a spare room or list it on Airbnb. This can bring you extra money and company, and allow you to stay in your own home. The Government’s Rent a Room scheme lets you earn up to £7,500 a year before tax is due. 

Downsize your home

Once your kids have flown the nest, your home might feel a bit big. If you decide to sell and move to a smaller place, you could free up some money. But there are lots of things to consider including:

• The market value of your house when you come to sell.
• The length of time it can take to buy and sell property.
• Estate agent costs, solicitor fees and stamp duty.
• The emotions of leaving your family home.

Thinking of moving? Saga Mortgages is here to help. We partner Tembo Money to give you expert advice and access to thousands of mortgage deals.  Note: The loan is secured on your home.

Help from loved ones

Have you spoken to your family about your needs? You may find they may prefer to lend or give you money. This could be because equity release reduces the value of your estate. And this can affect the amount they inherit. If they do give you some money, make sure all parties are clear about the terms. You don’t want any confusion later down the line.

Borrow some money

Looking for a more short-term option? You could take out a loan instead of using equity release. Make sure you have enough income to make repayments before going ahead. Speak to an expert adviser first. They can give you tips and assess your personal finances. They can also explain how different types of loan work. For example, interest rates on secured personal loans tend to be higher than with mortgages. And if you can't keep up with monthly payments, you could lose your home.

Retirement interest-only (RIO) mortgage

You could free up some funds by taking out a RIO mortgage. As with any mortgage, the loan is secured against your home. If you do not cover your monthly payments, your home may be repossessed. 

Here’s how a RIO mortgage works:

1. You take out a loan against the value of your home. 
2. You repay the interest every month, but not the capital of the loan.
3. The loan amount tends to be repaid when your home is sold. This could be when you pass away or move into long-term care.

Feel the options above aren’t right for you?

If you’re over 55 with a UK home worth at least £70,000, you could check out Saga Equity Release. As part of the service, your adviser will consider alternatives to equity release based on your personal situation. There’s no obligation to proceed. Equity release will reduce the value of your estate and may affect your entitlement to means-tested state benefits.