Without this crucial information, you could end up paying 1000’s of hard-earned pounds to downsize!
Sounds absurd? Well, it’s not.
When claiming your share of the over £2bn in equity that’s already been released in 2021, you MUST read the fine print. Otherwise, when you want to downsize at a later stage, you could be trapped in your big old house.
If you’ve already unlocked equity and now have decided to take a step in a new direction, we’ve got a secret to share.
We’ll help you discover:
- If it’s possible to downsize with an equity release plan.
- If there are costs involved in downsizing with equity release.
- The secret to avoiding these costs.
Could Downsizing While Having an Equity Release Plan Cost Your Life Savings? Find out now!
3 Main Reasons to Downsize
While there’s countless reasons why you may consider downsizing, here are 3 of the most popular ones:
- As a means to reduce time and money on property maintenance and upkeep.
- To take advantage of the empty nest. There’s simply no need for a giant home.
- As a way to drastically reducing bills. 43% of retirees downsize for this reason.
Downsizing is often practical and not financial. But, whatever your reason, speak to your financial adviser, who can guide you through the process.
Downsizing Repayment Charge Exemption
The biggest fear when it comes to equity release is being tied into an agreement that you can’t escape. This is more relevant than ever. Due to financial struggles caused by Covid-19, 1.8m retirees in the UK are looking to move to smaller homes. 25% of these within the next 12 months, 54% within the next 2 years and 21% at a later stage in life.
You won’t be restricted if you have the right lifetime mortgage. You could maintain your plan while moving into a smaller home, OR pay it off without incurring any penalties.
This Is Thanks to the Equity Release Council
Over the years, lifetime mortgages have evolved and have become more flexible and cost-effective.
The implementation of the council has brought about products like downsizing protection2. If your new home meets the proper criteria, you could transfer your current plan. In addition, there are options to downsize and pay back your equity release plan in full.
You can do so for 2 reasons:
- If you no longer want to carry your equity release to your new home.
- If your new home does not meet the criteria of your plan provider.
The great news is that 45% of equity-release products now come with downsizing protection. In general, it’ll be available to you after the first 5 years of taking out your loan.
Discover: The Best Equity Release Companies
The Benefits Of Downsizing Protection
Here are the 3 benefits of this fantastic tool:
- You can pay off your equity release with the balance of your home’s sale value without incurring extra costs that could be crippling.
- You have the option to move due to unforeseen circumstances.
- You can use the money saved for upkeep on your new home or new furniture or appliances.
How Do I Know if My Old Plan Has Downsizing Protection?
The best thing to do is speak to your plan provider or financial adviser. They’ll have insight into the terms and conditions of your plan.
Is Downsizing Worth the Fuss?
This is really a matter of opinion. Make an informed decision by researching and discussing your options with your financial adviser, friends or family members.
How Will I Know if My Potential Plan Has Downsizing Protection?
All legitimate plan providers will be open about this information upfront. You can ask them about this tool in your initial consultation.
Whether you’re releasing equity for the 1st time or have an existing plan, downsizing protection could be a handy tool.
However, before making any drastic life changes, you must weigh up the pros and cons. A plan with downsizing protection might come with higher interest rates, so it’s vital that you have the knowledge to guide an informed decision.
We suggest you speak to your independent financial adviser to see what your current or potential plan offers.