Early Inheritance Equity Release in Jan 2022

Do You Want to Give Your Family an Early Inheritance with Equity Release? Follow these 5 Steps

Contributors: Nicola Date, Katherine Read. Reviewed by Francis Hui

Discover How to Give Your Family an Early Inheritance With Equity Release & See Them Enjoy Your Estate While You're Alive! Here's How...

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Do You Want to Give Your Family an Early Inheritance? Follow These 5 Steps

How to Release Equity to Provide an Early Inheritance

Life is tough, and keeping up with day-to-day financial needs can be challenging for all ages, particularly in 2021. Covid-19 has made it even tougher to make ends meet or maintain a certain lifestyle.

If this is the case for your children or loved ones, releasing equity from your home to give them an early inheritance could be life-changing. Let’s explore this option to see if you could, perhaps, make your kids’ dreams come true!

What’s Equity Release?

Before we continue, let’s look at equity release in a nutshell.

Equity release allows you, if you’re a homeowner over 55, to unlock the cash tied into your property. This can be done in a lump sum1, a series of smaller lump sums, or regular income. The loan, plus interest, is then paid from the sale of your home when you pass away or move into permanent care.

Learn more about: What’s Equity Release and How it Works

There are 2 main types of equity release: 

Lifetime Mortgage

The first type of equity release is a lifetime mortgage. This type lets you take out a mortgage on your home if it’s your primary residence. However, you will remain the owner. You’ll have the option to ringfence2 part of your property for your family to inherit. You can also make repayments or let the interest increase.

Better yet, if there’s any loan amount or any accrued interest3, it’ll be paid back when you pass away or need long-term medical care.

Home Reversion

The second type is a home reversion, which means you sell a portion of your property to a lender who will give you a lump sum or regular income payments. In addition, you get to stay in your home until you pass away or move into medical care.

Now, how does this impact an early inheritance?

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Equity Release & Inheritances

Modern Inheritance

Revising the concept of inheritance is long overdue, especially now that people, on average, live longer, better, healthier, and more active lives. Today, you can receive an inheritance early from your parents if they’ve taken out an equity release plan. Many people plan to rely on that inheritance to fund their retirement instead of a pension. So, getting an early inheritance can be quite beneficial for your future financial planning.

Now:

Skipton Building Society did some recent research and found that 1 in 4 people don’t plan to give their children an inheritance. Something new has happened: spending the kid’s inheritance (or SKI-ing for short). More and more retired folks are celebrating the end of their lives, enjoying the equity release uses.

Passing on a Legacy

This can sound surprising, but if you look a little deeper, SKIers may have passed on a legacy already, in some way or another. As life gets more expensive, many people choose to gift their loved ones an ‘early inheritance’. This is often in the form of training courses, covering university costs, property deposits, weddings, or newborn babies.

Simply put…

For those helping their family in different ways than the norm, leaving a legacy isn’t enough. People want to see their inheritance being enjoyed while they’re still alive. That’s why SKIers use their most significant asset, their property, to help their family with a leg-up in life.

In addition, you can give your kids a boost to start a business or invest in their future. Releasing equity could change their lives.

Now, how does equity release work, and how does it relate to an inheritance in action?

Inheritance in Action with Equity Release

You’ve given an early inheritance if:

1. You’ve released equity, either a lifetime mortgage or a home reversion plan.
2. You’re older than 55.
3. In one way or another, you’ve gifted the money you received to your family.

Note: You can release a ÂŁ10,000 minimum and then leave more than that in a reserve fund so that you can withdraw it as and when you need.

Inheritance Planning & Lifetime Mortgages

7 Things to Think About BEFORE Releasing Equity for Early Inheritence

  1. You’ve spoken to a financial adviser who thinks it’s a good idea.
  2. Your family agrees to getting an early inheritance.
  3. You have no other means to help your family.
  4. You would rather give them money now, than at a later stage.
  5. Your property value could increase with time, leaving them even more when you pass away. The opposite could also be true.
  6. Interest will be paid on the money you have given them.
  7. With some equity release plans, you can guarantee an inheritance. Therefore, you could use the money yourself and still have some income for your family.

Got Questions? Check These First

How Quickly Can I Get Equity Release to Give Early Inheritance to My Kids?

How Does Early Inheritance Work?

How Can I Get Inheritance Early?

Can I Give Inheritance Early in the UK?

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In Conclusion

It’s amazing if you have the luxury to give your family an early inheritance and see them flourish because of it. You can change their lives now, rather than waiting until you pass away.

However, you must be aware of the equity release pitfalls before making your final decision.

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
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Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.
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Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
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Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.
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Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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Value of Your Home?

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