Equity release is a great way to inject a tax-free lump sum into your finances. But what can you do with the cash – and how are other people spending theirs?
From supporting grandchildren through university to enjoying a more comfortable retirement, let’s explore the most popular options for spending your tax-free equity release cash.
A common misconception about equity release is that you can’t take out an equity release plan if you have an existing mortgage.
The truth is that equity release could free you from the burden of your monthly mortgage repayments! You can use your equity release cash to pay off your existing mortgage. You’ll still own your home – but not be pressured by monthly mortgage repayments.
If you choose to roll up interest to the end of the loan, you won’t have to pay anything. Alternatively, if you want to leave more to your family as an inheritance, you can choose to pay interest-only or some capital and interest each month to reduce the loan amount. It’s up to you!
Buying a home is harder than ever before: 100% mortgages are few and far between. Most lenders need home buyers to have a deposit of 10% or more before they’ll agree to providing a mortgage.
Many parents help their children out by using their equity release cash to gift the required deposit. It means that, instead of waiting to inherit your property and sell it, your children can benefit from the cash injection of the property right now.
You’ve worked hard all your adult life – it’s time to kick back, relax, and take the holiday of a lifetime!
From cruises to around-the-world trips that last for months, equity release allows people to take the trips they’ve always dreamed of. Many take their entire family on a once-in-a-lifetime holiday to create lasting happy memories, too.
Equity release offers the cash injection that a huge 67% of homeowners need to renovate and improve their home, according to the latest UK Equity Release Market Monitor.
Home and garden improvements completed with equity release offer two clear benefits. First, it allows homeowners to adapt their property to enable them to live independently for as long as possible.
Second, home renovations may add to the overall value of a property. A new kitchen, bathroom, or extension can add extra space and enjoyment while you live in the property – and add to the sale value, too. (This is not guaranteed and house prices can always go down as well as up).
Whether you need a larger car to transport the ever-growing family or want to splash out on that Porsche you’ve always wanted, the tax-free cash from equity release makes this a reality.
A reliable car is essential – and added luxuries like heated seats and easy open/close boots make every journey more enjoyable.
Many people use some or all of their equity release cash as a gift to their grandchildren to support their studies.
The average living cost of going to university is now £807 a month. For a three-year undergraduate degree, that’s a huge £29,052 – and that’s before the tuition fees of up to £27,750.
Student loans and grants don’t cover this huge £56,802 price tag for three-year degrees. If your grandchild also wants to take a Masters or a longer degree, such as medical training, the costs are even higher. A gift – or a loan – from your equity release lump sum could help your grandchild focus on their studies instead of having huge financial stress.
Like buying a home and going to university, the third major life event you’ll experience as a parent or grandparent is the wonder of a wedding.
The celebration is a fantastic time – but it comes with a huge price tag. The average wedding in the UK now costs almost £32,000! You could help your loved ones have the dream day they’ve always wanted by helping them with the price tag.
The State Pension age has risen to 66 – and it’s not enough to rely on for a comfortable retirement, either.
The full State Pension is £8,800 a year – but couples spend an average of £2,200 each month in their retirement for basic living. A comfortable retirement costs an average of £42,000 a year. While you may have workplace pensions or private pension plans in place, these are unlikely to deliver the income you need to actually enjoy your hard-earned time off in retirement. Equity release provides you with financial security and helps you to plan an enjoyable retirement – it could even help you to retire earlier, too!
Equity release, like all other investments and financial products, is suitable for some people and not others. Our impartial equity release experts can help you to find out if you would benefit from a tax-free cash lump sum from an equity release plan.
We’ll never encourage you to take any financial decision that’s not in your best interests, either. Our advice is neutral and always takes your personal circumstances into account.
Call us on 0800 680 0356 to find out if equity release could be the right solution for your financial future. If it’s a suitable route for you, one of our expert equity release advisors will call you back to discuss your options.