At April Homes we like to keep abreast of trends not only in the UK housing market, but also in the wider economy.

We were therefore intrigued to read a piece of research by Equity Release Advisers, Key Retirement, which revealed that pensioner property ownership has now hit a record £926 billion. This rise has led to an increasing appetite among the older generation for equity release.

Equity release is the process by which homeowners aged over 55 can raise money to fund their retirement by selling off a share of their home or raising a lifetime mortgage where the interest charged is rolled up in to the debt and nothing is repaid until death or relocation into a care home.

While this approach sounds attractive, there are pros and cons to be aware of:

  • The cash that is released is tax free, but if you decide to sell your main residence the cash that releases is also tax free.
  • You still retain ownership of the home with a lifetime mortgage, but that is also the case if you downsize and live mortgage free.
  • You can live there as long as you choose, but again that also applies if you downsize.
  • Typically there are no monthly payments on an equity release lifetime mortgage, but if you downsize and buy for cash there are definitely no mortgage payments either.
  • You will never owe more than the value of your home, but if you downsize and live mortgage free you will not owe anything.
  • The money released is yours to use however you like, but that is equally true when you downsize.

Downsizing can of course be stressful, especially in older age, but with careful and considerate management it can be achieved with relatively little fuss. You have the potential to build up further value in your home to pay for long-term care if that were ever needed, and you will also be in a position to provide an inheritance for your loved ones or even for your favourite charity.

We’d be delighted to offer further advice on downsizing, so why not contact Helene or Gareth on 01284 413 204