How Equity Release Can Help You in Retirement

There are several ways to fund your retirement. Savings and retirement pensions are the usual ways to do this. Unfortunately, these are not enough to meet the needs of many facing retirement. If you are 55 years of age and own your home or almost have it paid off, equity release is another way to find the funds you need. Equity release schemes are now regulated by the Financial Services Authority. There are two types of equity release that are proving to be beneficial to seniors.

The first type is a lifetime mortgage. This requires a new loan on the property. You or your partner retains the rights to the property. You remain the owner until your death at which time the property is sold. After repaying the loan any funds that remain are then turned over to your estate.

The second type is a home reversion plan. This type only requires you to sell a percentage of the ownership of your property. You or your partner retains rights to the whole property until your death. Ownership of the property that was sold can be bought back by your estate.

Both equity release schemes provide a tax free cash lump sum or regular income for life. The decision is yours to make. This money can be used in any way you decide.

The main advantage for your heirs is to reduce inheritance tax paid by your estate. You may decide to give your heirs money while you are alive so you can help them out financially or so you can see them enjoy the money. Another advantage is that you are no longer dependent upon your family for money to live on. You can relax and enjoy your retirement without worrying about being a burden to anyone.

The main disadvantage is that the amount of the actual inheritance is reduced. Does your property represent the main portion of your estate? Will your heirs be disappointed not to receive the property? Are you comfortable that you are doing the right thing?

Talking with your family will help make these decisions easier. Your heirs may not want your property. They may be happy with their way of life as they have arranged it. Helping you make the decision to sell the property may take a worry off their minds. You family may know of other organisations that can help with your retirement. The Elderly Accommodation Counsel is an example of one of the many organizations that have been formed to help make your retirement an enjoyable experience.