A COMMON question is what are the alternatives to Equity Release Mortgages. Equity Release mortgages may not be for everyone and there are alternative solutions for you to consider. These also may not suit you but your independent broker will go through your circumstances and advise you on the best solution.
A report released in 2021 by Key found that 557,000 Britons have used equity release in the past 20 years releasing more than £32billion of cash.
Alternatives to Equity Release Mortgages
Equity Release allows you to release cash from your home and continue to live there. However, there are other avenues you could consider.
One thing you could explore as an alternative to Equity Release is downsizing to a smaller, cheaper to run and cheaper to maintain property. If you do consider this you will also have to judge what the housing market is like at the time, the length of time it would take to sell the property, what stamp duty you would have to pay, legal and surveyance fees, the physical cost of moving and of course the emotional cost of leaving your home where you have perhaps lived for years, rearing your family.
Another thing you could consider is approaching your mortgage lender to extend your mortgage term. If, by the time you retire, and you haven’t paid off your mortgage, your lender may extend the term of your loan for a longer period.
You could also consider using your home to generate an additional revenue stream by renting out a room in your house or indeed renting out some parking space. The government have a scheme called ‘Rent A Room’ which means you can earn up to £7,500 a year tax free. If you do go over this threshold you will have to fill in a tax return.
Another alternative is to take out a Retirement Interest Only (RIO) mortgage. This is quite similar to an interest only mortgage but there are some key differences which your adviser will go through with you. An RIO mortgage allows you, as the homeowner, to re-mortgage to release equity and you just pay off the interest.
You could also think about re-mortgaging. Speak to your adviser about seeking out a new mortgage deal to free up equity.
Or, you could also consider getting a part time job. People get to a certain stage in their lives and this may be deemed a daunting thought but if you are needing extra cash, this is an option.
There is a lot to think about whether you choose Equity Release or not.
Your Worldwide Financial Planning broker will help you explore all of the options you have when it comes to Equity Release and help you decide if it is right for you. Reach out to us if you are considering Equity Release. Email info@wwfp.net and one of our brokers will get back in touch with you to help you on this stage of your financial journey.