How equity release can help you prepare for the future
by Richard Barrett – Director of Sales
Last updated 28th August 2024
3 min read
When you release equity and pay off any existing mortgage, you can use the rest of the money however you like.
Some people choose to release equity to pay for one or two big spends, like home renovations, family gifts, or travel. But many others use the money to improve their quality of living in later life and retirement.
This article looks at the ways equity release can be used to prepare you for the future.
Paying off debt
Our recent study found that the average debt that someone over 50 still has is around £65,000 left to pay on a mortgage, £6,000 in personal loans, and over £2,000 on credit cards.
Unsurprisingly, of those who had paid off their debts, 85% said that doing so made them happier.
The most common type of equity release, a lifetime mortgage, is also a loan. But it doesn’t need to be paid off until you die or move into long-term care (although some providers do allow you to make one-off or regular repayments to help reduce the total cost of borrowing).
This means if you use equity release to pay off your mortgage or other loans, you no longer have to make any monthly repayments. So, you’re free to spend more of your income on enjoying your retirement.
If you do release equity you will need to pay off any outstanding mortgage. You can use the money you release to do this.
Home adaptations
It’s no secret that as we age we start to get less mobile. But that shouldn’t be a reason to move out of a home you love. Even if the staircase has become more of an inconvenience than you’d like to admit!
Some people use equity release for home adaptations to make daily living easier. Installing a stairlift or a walk-in bath can be the difference between living comfortably at home or having to consider moving somewhere more accessible.
In-home care
In-home care is another way equity release can be used to improve your quality of life in retirement.
Depending on your circumstances, this could mean as little as having someone pop round to clean up and make a meal or two.
Or, it could pay towards full-time care in the comfort of your own home, as an alternative to moving to a residential care facility.
Early retirement
For those still in work, an earlier retirement is another possibility that equity release can unlock.
Maybe working is impacting your health, or you just want to start winding down your responsibilities at work to spend more time on your hobbies. Or maybe you’re looking for more free time to help care for grandchildren while they’re young.
Whatever the reason, equity release could help to tide you over financially, letting you retire earlier than planned.
Other ways to make the most of equity release
Everyone releases equity for a different reason. Whether it's to prepare for the future, gift early inheritance, or to enrich later life with travel or home improvements – there’s really no right or wrong way to spend it.
But, it’s a big financial decision and you should always seek independent financial advice before deciding whether it’s right for you.
Equity release isn’t right for everyone. It will reduce the value of your estate and the amount you’re able to leave as an inheritance when you die. It may also affect your tax position and your entitlement to state benefits.
There are a number of alternatives to equity release which could better suit you.
Find out more:
The thoughts and opinions expressed in the page are those of the authors, intended to be informative, and do not necessarily reflect the official policy or position of SunLife. See our Terms of Use for more info.