As families up and down the country prepare for what is set to be the longest-ever recession in history, finding ways to reduce the financial strain has become a matter of urgency. If you’re looking for ways to support your loved ones, equity release could be an option.
Before you release equity from your home, though, you must check that it is a viable and suitable solution for your family. Here’s all you need to know.
Can Equity Release Bristol Be Used To Support Your Family?
The short answer is, yes.
In fact, supporting family members has been one of the chief incentives for using equity release services for many years. The plans are primarily aimed at homeowners who either own their properties outright or have a small mortgage remaining (this would need to be repaid from the funds raised).
Whether you’re looking to borrow money against the value of the property or sell a percentage of it, equity release allows you to gain access to a lump sum of cash without having to move out of your home. Once those funds have been released to your account, they can be used to support yourself or your loved ones or a combination of the two.
Given that millions of families have felt the pressure of inflation throughout 2022, the upcoming recession is an opportune moment to consider equity release. While it will reduce the inheritance that loved ones receive when you pass, which also means you should consider updating your will. The funds could be key to their financial survival in these difficult times.
Better still, it will save them from needing to take out loans at a time when interest rates have increased significantly.
How Can Equity Release Help Your Family In The Recession?
The harsh reality is that the forecasted recession will push a lot of households to breaking point. Over two-thirds of Brits are worried about the current economic climate. Therefore, the funds gained through equity release plans could be more valuable than ever as many families who were previously in a stable position are now faced with immediate uncertainty.
Following the completion, gifted monies gained through equity release could be used for virtually any purpose.
In truth, the list is virtually endless. Whether gifting funds to your children or distributing money across multiple households, equity release could be the financial safety net that your family needs.
Some Things to consider
When raising money via equity release, there could be implications from a tax perspective but it could also be used for inheritance tax planning as the mortgage balance may be deducted from your estate. You should always seek independent advice from a suitably qualified tax professional when arranging equity release. Raising funds against your property can also have an impact on your access to benefits.
Advice, legal and valuation fees may also apply.
Some people are concerned that the balance of an equity release mortgage will grow over time. Whilst that is the case if you allow the interest to roll up, you can make voluntary payments to stop the balance growing or even to reduce or repay the mortgage over time.
Lifetime mortgages also come with a no negative equity guarantee, meaning that the mortgage will never be greater than the value of your home.
Normally a lifetime mortgage is repaid by selling your home should you pass away or move into long term care. That said, products also come with downsizing protection arrangements should you wish to sell your property, move somewhere smaller and repay the mortgage.
Begin Your Equity Release Process Today
If equity release is deemed the best solution for your family, it’s important to get the process started before your family’s immediate financial situation gets any worse. Here at Clifton Mortgages, our team of experienced experts can guide you through every step of the process.
To learn more or arrange for a full consultation, contact us today.
Equity release is designed to help customers aged 55 plus who either own their property outright or have relatively small mortgages left to pay, although you can use it to buy a property as well. You can either take out a loan against your home or sell part or all of it to a third party who gives you the right to live in it for life. The loan is repaid upon your death or if you move into long term care and are unlikely to return.
A lifetime mortgage is a long term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate.