Financing retirement has changed over the years. The more debt-free your retirement is, the less likely you need government assistance in old age.
You can use your property as an investment – if you start investing in the property while working and continue after retirement. This would mainly be through a buy-to-let scheme and could help you grow your wealth without needing to do extra work.
There’s never been a better time than right now, where there’s such variety available. It doesn’t matter whether you’re looking at homes with gardens or apartments – what matters most is that you can find something that fits your needs perfectly.
2 Ways to Use Your Home to Finance Retirement Other Than Equity Release
Downsizing is a great way to supplement your pension1 if you’re looking for an apartment or a townhouse. They also often come with amenities that make them well-suited for downsizing (for example, built-in storage).
In addition, since apartments tend to cost less than homes, it could mean that any savings made from not having to maintain the property will go towards other costs such as travel.
On the other hand, many retirees choose their location due to affordability rather than proximity to their family, so the downside might be feeling isolated from family members who may reside far away.
Feelings of isolation and loneliness are terrible for mental health. It’s essential to make sure that somebody is nearby for any in-person needs like going to the doctor. It also might be good if people who live nearby can help out with more demanding tasks such as grocery shopping.
Some retirees may not have kids themselves, so they may need someone close by if they don’t feel comfortable driving independently due to a health concern.
Letting Out a Room
This is a way to generate some additional income to help you when it’s time to retire. You can use the rental income as a supplement or even live in one of the rooms yourself and rent out the other space.
In addition, you could list your home on Air BnB, constantly meeting new people from all over the world.
8 Reasons Why Equity Release is an Excellent Choice
An equity release scheme can supplement pension income by unlocking cash from a property like a house.
- It’s an easy access to cash flow.
- Relieves future worries about unexpected expenses.
- Allows retirees to get back some of what they paid off during their lifetime through a home loan or mortgage, with monthly repayments, based upon how much money is available from the value of the property.
- An equity release plan can offer peace of mind about future expenses while still owning your own home.
- It’s tax-free income.
- Equity release schemes are a type of mortgage insurance that protect lenders if you fail to repay your loan on time.
- It also protects you by giving you peace of mind in retirement even though it doesn’t mean that when someone dies there may be less equity in the property.
- Lastly, it can be a great way for people to supplement their income and provide them with some of what they have earned over the years, while still retaining ownership.
Things to Consider
- You will need to be sure that your home has some equity left in order to secure funding – which means looking at how much mortgage debt is still outstanding and working out if this would provide enough funds for equity release.
- You’ll need to work out whether or not property prices in the UK have been drastically changing over recent years because they could well affect any equity release plan as repayment amounts might change too.
- When choosing an adviser make sure they have good qualifications and experience, this way you can feel confident that everything is being done properly.
How Do You Determine If There's Equity Left in Your Home?
You’ll need to work out whether or not property prices in the UK have been drastically changing over recent years because they could well affect any Equity Release plan as repayment amounts might change too.
Is Equity Release with Property Suitable for Me?
Equity release suitability differs from one person to the next. Speak to your financial adviser to decide if equity release is right for you!
While there are additional ways we discussed above, equity release is also a great way to supplement your pension and financial situation. In addition, it allows you to release equity in stages if that suits you best.
when deciding how much property you can use to supplement your retirement income, one thing to consider is whether there’s enough equity in it relative to the property’s value. If not, it may be better to use other forms of equity such as cash savings or shares.
Have a look at the equity release alternatives and get in touch with your financial adviser to find the best moves for you and your family.