Have you considered all the options for raising cash from your home?
We look at some creative equity release alternatives in detail
Equity release is an increasingly popular choice to boost income later in life. But what are
your other options if you need to raise some extra money? We look at alternatives to equity
release that might suit you better.
If you're struggling to live within your means in retirement, you could start with the
obvious, by looking at your income and regular outgoings to see if there are any areas where
you could cut back. For example, you could:
Look at subscriptions and direct debits to see if there's anything you could
Review the contracts you have with mobile phone and other providers to see if there
are cheaper deals.
Check your insurance policies to see if you can make any savings.
You may not raise a large amount of capital this way, but you can look for ways to make your
current income go further. The MoneySavingExpert website is a good place
to start for helpful budgeting advice.
If you're used to being financially independent, you might not immediately think of
looking to the state for any benefits that you might be entitled to. As part of the Saga Equity Release
service, provided by HUB Financial Solutions Limited, you'll receive a free state benefits check through
an adviser to ensure you're claiming everything you're entitled to.
According to popular website entitledto, which
helps people determine if they can claim from national and local government, about £15
billion of benefits remain unclaimed each year. Start by reviewing your situation with this
Some local authorities and charities make grants available to people who need to make changes
to their home so that they can go on living there independently. This is worth investigating
further if this applies to you.
Local councils might help pay for small adaptions such as grab rails or ramps, and you might
be able to get help for more expensive adaptations as well.
There are nearly 200 Home Improvement Agencies who offer advice and support so that you can
stay in your own home for longer, and many charities who offer grants. Find a local HIA or find out more about the Independence at Home charity.
Many people have some savings or investments set aside for a rainy day in retirement. You
might want to think about whether using some or all of these savings would help your
situation as alternatives to equity release.
You'll need to investigate the tax implications of following this route and it would be
best to seek independent financial advice before going ahead.
For most people, their home is the most expensive asset they own, but there may be other
items that will help you release money when you need it.
We've all got stuff that we no longer need or can find a use for, from jewellery we no
longer wear, to household appliances and even additional cars. Are there items that
don't have sentimental value that you could sell? From selling through car boot sales to independent
specialists, it's worth thinking about whether you have anything that can go.
Not everyone is ready to stop work at retirement and do nothing for the rest of their life.
You could get a part-time job or carry on with a ‘side-hustle’ that earns money
for you and lets you keep working on that side project you love.
Many companies now have schemes that actively encourage more experienced workers to join or
continue in employment, and it has the benefit of keeping you involved with other people and
active for longer.
Rent out a room
If your home has more space than you strictly need, you could think about renting out a spare
room to a lodger or even consider listing the room on Airbnb.
Under the government's Rent a Room
scheme you can earn up to £7,500 a year from a tenant before any tax is due on the
proceeds. This could bring in some much-needed extra money (and company) while allowing you
to remain in your current property.
Once your children have grown up and left home, you might have more space in your current
house than you need. Downsizing by selling and moving to a smaller, less expensive property
can free up some extra cash.
There are some disadvantages to consider, including the market value of your house when you
come to sell, the length of time it can take to successfully buy and sell property, and the
extra costs of moving such as estate agent and solicitor fees and stamp duty.
Plus, moving may even lead to having to buy new furniture or redecorate to suit your tastes.
And don't forget to take into consideration the fact that you'll have to leave what
might be your longstanding family home.
Help from your family
You could talk to family members about your options for freeing up some extra cash. Although
this might not be the easiest subject to broach, they may prefer to lend or give you money
as an alternative to equity release, as the latter option would end up reducing the value of the estate and eating into their eventual inheritance.
If they do decide to send some money your way, make sure you're both clear about whether
you're receiving the cash as a gift or a loan to avoid any awkwardness later down the line.
You could look at forms of borrowing as an alternative to equity release. Even if you're retired
you can take out a personal loan against your residence, provided you have enough income to make
future repayments. You can arrange a loan as a short-term solution as and when you need to,
unlike the lifetime commitment of equity release.
However, interest rates on secured personal loans are more expensive than mortgages and if you
can't keep up with monthly payments you risk having your property repossessed. Unsecured
loans such as credit card debts give you the possibility or borrowing money without any form
Whichever option you choose, make sure that you have enough income to make repayments before
going ahead. Speak to an expert adviser, who can give you tips and assess your personal finance.
Retirement interest-only mortgage
You could look at this type of mortgage, which is only available on your main home and works
in a similar way to a standard interest-only mortgage. With retirement interest-only
Like a lifetime mortgage, the loan is only paid off when you die, move into long-term
care, or sell your house.
You only have to prove you can afford to pay the monthly interest payments.
Borrowers over 55 might find them easier to get than a standard interest-only mortgage.
If you've considered these alternatives to equity release and still want to explore the
equity release option, it's time to check out Saga Equity Release – a no-obligation, no-pressure advice service for those aged 55 or over with a UK home worth at least £70,000. The product available through Saga Equity Release is the Saga Lifetime Mortgage. A lifetime mortgage is a loan secured against your home.
As part of the service, the adviser will consider alternatives to equity release based on your personal circumstances. Please be aware that equity release will reduce the value of your estate and may affect your entitlement to means-tested state benefits.
Here and ready when you are
Whether you have questions about equity release or just want to find out more, the expert team are on hand to help.