Last updated 3rd June 2019
How could tax-free cash from equity release help your family? Give an early inheritance, help with a mortgage deposit or pay for tuition fees.
Wouldn’t it be great if we were still around to see our family enjoy their inheritance? Well, with equity release you could live a more comfortable retirement – and give some money to those you care about most.
You could lend a hand to your loved ones
So, you’re thinking about unlocking cash from your home with equity release? When your later years roll around and you retire, having some extra money could make your lifestyle much more comfortable.
If you decide to take out equity release – and you still have some money to spare after you’ve taken care of yourself – it’s only natural that you’d want to give your loved ones a helping hand, too. And if this is the case for you, wouldn’t it be great to put your cash to work for the good of your family?
See your inheritance in action
Perhaps your children or grandchildren are heading off to university soon, or they’re making wedding plans. As you may already know, these things don’t come cheap – a year of tuition fees now costs around £9,000, and the average cost of a wedding in the UK is at an all-time high.
If any of this sounds familiar and you’d love to be able to make a contribution, equity release could be the answer. If eligible for equity release, you could unlock between £10,000 and £100,000 or even more (depending on your age and the value of your property). And when you do, it’s yours to spend as you wish.
With the extra funds, you could to do the things you’ve dreamed of and still have some to spare for the people you care about. Giving loved ones some of their inheritance during your lifetime means that you can see the difference it makes to their life and the pleasure it brings.
If someone close to you is struggling to save for a mortgage deposit, you could always consider using equity release to...
Help them onto the property ladder
We’re always hearing about rising property prices. And as a homeowner, you may well have benefited from them over the years.
Let’s put things in perspective…
If you bought your first home in 1976, you’d have paid an average of £12,704* for it – which is unheard of today. Maybe you’ve seen the price of your home grow over the years – and you’ve managed to pay off your mortgage – and it’s one of the reasons you’re considering equity release in the first place. After all, it’s a safe way to unlock extra cash without having to sell up and move to a smaller property.
Meanwhile, the younger generation are having a hard time affording homes of their own. And when the average UK house price now stands at £226,071^, it’s no wonder. Perhaps your own children or grandchildren are struggling to save the deposit needed for a mortgage – and they could do with a hand getting on the property ladder.
*Office of National Statistics
^UK House Price Index as of November 2017
You could boost their mortgage deposit
The good news is that you could give them some financial assistance with equity release. Whether it’s a full mortgage deposit or a boost to their savings, your gift could provide a welcome leg-up when they need it most.
Of course, how much they need for a deposit will depend on their circumstances. But wouldn’t it be more useful to help your children or grandchildren buy a home today, rather than waiting until you pass away? After all, it’ll give them a good start in life.
Do you pay tax on equity release?
Nope, the cash sum you release is completely tax-free. You can read more about how it works in our guide to equity release.
Though you won’t be taxed on the initial cash sum, here’s something to bear in mind: unlocking cash with equity release could affect your eligibility for means-tested state benefits (like council tax reductions, income support and pension credits).
There are many different avenues with equity release that can change depending on your circumstance. For example, if you give a loved one a deposit for their house and die within 7 years, there may be a tax charge on this money. This is a very complex area, which is why you must make sure you talk to an Age Partnership Financial Adviser to thoroughly talk through your own personal case. Your financial adviser will talk you through all the ins and outs of equity release and the possible outcomes for you and your family.
(Our SunLife Equity Release Service can put you in touch with one whenever you’re ready).
Equity release is a family decision
However you’re planning to use the cash from equity release, make sure you talk to your family members first. They’ll want to know about your financial plans for your future, and it’s your chance to let them know you’d like to lend them a helping hand.
Just bear in mind, releasing equity from your home will reduce the value of your overall estate – and the amount you’re able to leave as an inheritance when you’re gone.