Unlocking money from your home with equity release can be a great idea. But it’s a big commitment, so make sure you give it plenty of thought beforehand.
1. Do your research
In summary, equity release is a popular way to improve your financial situation in later life – by unlocking tax-free cash from your home. There’s no need to move house to access the money – the loan and accrued interest is simply paid off when your home is sold after you pass away or move into long-term care.
You may already know the basics of equity release, but it’s important to do as much research as you can – so you can understand what it means for you.
When you have a few minutes to spare, it’s worth reading our equity release guide – where you can learn more about different equity release schemes and how they work. And if you think it could work for you, it’s time to get professional advice (more on this later).
2. Think about what the money is for
There are lots of reasons why equity release can help in retirement. So it’s worth having a think about how it could work for you.
If you still have a mortgage, the money you release will pay this off first (along with any other debts secured on your home) – and if there’s anything left over, it’s yours to spend as you wish.
For example, some people use the cash to top up their pension in retirement – while others put it towards home improvements, or give a relative an early inheritance to help them onto the property ladder.
You don’t need proof of income or affordability to get an equity release plan. Instead, the cash sum you borrow depends on your age and the value of your home.
Use our FREE equity release calculator to see how much cash you could unlock.
3. Get the right advice
Once you’ve done your own research and considered how the money could help you, you need to speak to an independent expert adviser.
They can help you decide whether equity release is the right solution for you – as well as talking you through various equity release plans and equity release interest rates.
Your adviser should be subject to Financial Conduct Authority (FCA) regulation and be a member of the Equity Release Council (ERC) – an industry trade body that sets high standards members must follow beyond the fundamental regulatory requirements.
Most importantly, an adviser that meets the above criteria is required to recommend the best way forward or plan, if suitable, based on your circumstances.
When you speak to your adviser, feel free to ask as many questions as you like. You should be confident that you understand the ins and outs of equity release schemes before making any final decisions.
4. Take your time to decide
Taking out an equity release plan is a big decision – and it isn’t right for everyone. So take your time and have a think about all the options available to you, and don’t feel like you have to rush into a decision.
It’s also essential to discuss your plans with your partner. And it’s a good idea to keep your family in the loop too – because equity release means you won’t be able to leave the full value of your home behind for your loved ones. Remember, the sale of your home will be used to pay off your loan – and any money left over will go to your estate. If you want to make sure you leave an inheritance, let your adviser know as they can give you advice on how you can ringfence some of the equity you have in your home.
If you’ve booked an appointment with an independent expert adviser, you should bring your partner or a family member along with you.
5. Get an equity release plan that works for you
Make sure you get an equity release plan that suits your circumstances. This is something your independent expert adviser can help you with.
Many equity release plans will allow you to move home without incurring a penalty – so if this is important to you, make it known to your adviser. You should also consider whether you want to take all of your money at once as a lump sum – or if you’d prefer to get smaller amounts as and when you need them.
Things like this will determine which product will suit you best. And with such a variety of equity release schemes on offer today, it’s important you choose a plan that suits you.
SunLife offers a range of straightforward and affordable products including over 50s life insurance, funeral plans, life insurance, equity release, pet insurance, home insurance, car insurance, ISAs and Will writing services