If you need extra money, you don’t always need to turn to high street loans which may not be practical in the long term.
As a homeowner, you may want to consider equality release as a way to free up cash from the value of your home.
It’s a big decision and one that shouldn’t be taken lightly.
There are a lot of people releasing home equity. By the end of 2017, £3.06 billion was released to homeowners over 55 though unlocking money in their homes, according to the Equity Release Council.
With house prices going through the roof of the last 20 years, chances are, your home is worth a lot more than you bought it for.
If you’re after some cash, releasing equity could free up money tied into your home without you needing to move out.
What’s your wish?
There could be a number of reasons why you need to free up some money from your home.
Perhaps you want to carry out some home improvements? Maybe add a conservatory, get new appliances or carry out some much needed repairs to your home?
What about using the money for a holiday of a life time? You might have always dreamed of taking a cruise around the world.
Maybe you’ve been thinking about releasing equity in your home to clear down other debt, pay off car finance or you’ve realised you have a shortfall in your pension?
Or, have you been thinking of using your home equity to help your loved ones? Whether it’s helping to pay for university fees, putting money towards a wedding, helping with costs of a new baby, or giving a lump sum to get your family onto the property ladder.
To help understand all the choices, SunLife has created the Dream Shopping Basket so you work out how far money released from your home would take you.
As a handy guide, it has already worked out the average costs of what you might want to spend the money on, leaving you to just put in your total estimated equity. Then it’s just a matter of working out what you want to put on your wish list.
You may think your wish list is too big but, by using the Dream Shopping Basket, it breaks down all the costs, so you can work out what you want to do with your money, and perhaps have a little left over to treat yourself later on down the line.
Home equity release
There are different kinds of equity release available.
You could choose a lifetime mortgage, where you borrow against the value of your home (and continue to live there). You won’t have to make any repayments, but interest is added to the mortgage and the mortgage and new interest is repaid when the property is sold.
Alternatively, there is a scheme known as home reversion where you sell all or a part of your home at a reduced price. You are able to stay in your home, living rent free, and will get a cash lump sum.
Working out what equity release is best for you will come down to a lot of different factors, including how much your home is worth, how much equity is available, how old you are, if you want to leave an inheritance and if you want to keep ownership of your home.
Making the decision to release money from your home isn’t something you want to take lightly.
Depending on how much money you are looking for, there may be other options you can check like using your own savings or investments, moving to a smaller property, or taking out an unsecured loan.
You could also check if you’re missing out on any benefits, which could help with extra money on a month to month basis.
Please do talk to your family about what you’re planning and seek professional financial advice before you to go ahead and release equity.
Naomi knows the burden of living on very little and became debt free by learning from past mistakes and following her own money saving tips and tricks.