People spend all their life working, paying off bills and waiting for vacations. For some, retirement is the only chance to rest and do something they’ve wanted for a long time.
However, some of us may experience financial problems even after forty-five years of working and paying taxes. You might still have to pay off your mortgage and other debts. Feeling all this pressure might make you regret you retired.
There are different ways for seniors to make extra money and maintain the lifestyle they are used to. They can find a part-time job and keep working or ask their relatives to help them.
So far, there has also been a discussion on responsible equity release and how it can benefit people after 60. If you want to have the retirement that feels like a well-earned reward, consider accessing your property’s value for more cash.
How does equity release work?
For example, you have a house, and you don’t plan to bequeath it, you can apply for equity release. It will allow you to unlock the value of your property and get some money.
To apply and choose the right type of equity release, you need to be over 55, and your property should worth over £70,000. The good thing is that you can still be eligible for equity release even if you haven’t paid off your mortgage yet. However, every case should be discussed individually.
It is a financial decision. So, you need to research before signing any documents since contract terms may vary from provider to provider.
First of all, you need to talk to an equity release adviser in order to learn all the details of your provider’s offer. You can compare a few companies so that you can find the right one for yourself. After you do it, fill in an application, and you will be able to get a valuation of your property. It is a standard procedure that determines the amount of release you will get. Make sure to obtain independent legal advice on your case from the solicitor.
Keep in mind, there might be extra fees and costs that include a valuation and arrangement fees, and building insurance.
Types of equity release
There are a few main types of equity release you should know about. The first and most popular one is called lifetime mortgage. It means you will borrow a proportion of your house’s value and you will be able to stay in your home till the end of your life.
However, you will still be responsible for maintaining the house. It is essential to mention that some providers will offer larger sums to you if you have certain lifestyle factors or medical conditions that include regular smoking, high blood pressure, being overweight or on-going medical problems.
If you consider a lifetime mortgage, ask your advisor about extra fees and the possibility to transfer the scheme if you move elsewhere.
You can also choose the home reversion scheme that allows you to sell a share of your house to the provider for less than the market value and stay in your house as long as you want. This option is available for people aged over 65.
If you take out equity release plan, make sure your provider is a member of the Equity Release Council. Also, discuss all the details with a financial advisor or an independent mortgage broker, so that they can help you find the best deal.
Another essential advice is not to borrow the full amount at once. It might be difficult to calculate how much money you will need for the next twenty years of your life since it’s impossible to predict the economic future. So, try to borrow as little as you need now.
The benefits of equity release
Taking out equity release might be a big step. That’s why you need to make a list of your reasons. You can live a modest life and use this opportunity to top up your pension. You will be able to pay off bills, help your children and grandchildren, and get past financial worry.
It is essential to mention that you can spend the money you get from the deal any way you want. Tax workers will not be bothering you with the questions.
For example, you can use the extra income to go on a holiday of a lifetime. People in their 20s, 30s and 40s usually are super busy with their families and careers. No wonder, they don’t have time or financial possibility to travel the world, explore different cultures and meet new people.
It is never too late to plan the trip, pack your suitcase and go on the best vacation of your life. You can travel around Europe or South America, volunteer in Africa or finish writing your first book in the wooden house in Norway.
Also, you will be able to afford presents for yourself. Buying a new car or going to horse riding school will become possible.
So, don’t think that retirement is the time to complain about your health, take pills and worry about money. There are many different possibilities that can allow you to live the life you want. However, it is essential to talk to your family and get specialist advice since equity release is a big decision that needs some planning.