In times gone by, considering an equity release loan had somewhat ‘dubious connotations.’ This is because it often entailed selling your property to a loan provider with often ‘questionable’ results, leading such action to be viewed as an act of financial desperation. However, times have changed. Escalating property values has seen a huge surge in the provision of ‘Lifetime Mortgages,’ backed with regulated and more financially viable equity release arrangements where you not only retain ownership of your home, but also, a higher degree of control.

Ever increasing property values along with several other reasons besides, has helped to drive the ever-increasing percentage of over 55’s opting for ‘lifetime equity release mortgages’ and with this, a far greater degree of acceptability and brands specialising in such mortgages.

New research from ‘Standard Life & Age Partnership’ suggest several factors for the increase. Emotional reasons, a wish not to downsize, the inability to find smaller property in the ‘right’ area and the wish to avoid high moving costs such as Stamp Duty, are all motivators.

Popularity of equity release has also seen the introduction of ‘No Negative Equity Guarantees’ (NNEG’s) to help protect you against property market fluctuations. Furthermore, you retain the right to move or change mortgage providers.

The current state of the equity release market is perfectly summed up by ‘Billy Burrows;’ Director of The Retirement Academy’ who stated ‘Most people don’t understand or engage with their pensions and investments, but they do take a huge interest in their property since it’s the family home and their single largest asset.
I previously thought equity release to be a loan of last resort. However, I am now convinced that, in the right circumstances, it can be used to achieve better outcomes for people in later retirement.’

Funding your retirement in such a way can also help reduce your Inheritance Tax (IHT) Liability. For advice on how to effectively fund your retirement and to reduce your IHT liability, talk to Dunham McCarthy.