Managing your money in retirement
As you enter retirement, it can become harder to manage your money. Your income may reduce, but that doesn’t always mean your outgoings follow the same trend.
Some may be able to top their income up with a private pension to continue living comfortably. But for others, that’s not the case. And it can be difficult to find a balance between living the retirement you’ve always wanted and keeping up with regular bills.
The rise in living costs could mean you have to sacrifice the retirement you want just to get by. However, with equity release, that doesn’t have to be the case.
Using equity release to help with regular bills
Equity release allows you to access some of the funds tied up in the value of your home.
It comes in two forms; a lifetime mortgage – which is the most popular type of equity release – and a home reversion plan.
By releasing tax-free cash from your home, you could get the financial support you need to cover your regular bills and live the later life you’ve always wanted.
Using a lifetime mortgage to help with regular bills
A lifetime mortgage is the most popular form of equity release and there are many features available.
With a lifetime mortgage, you secure a loan against your home – much like a regular mortgage – however, you don’t have to make any monthly repayments unless you choose to.
Instead, the loan, plus roll-up interest, is repaid when your plan ends, which is usually when the last remaining applicant either passes away or moves into long-term care.
Also with a lifetime mortgage, you retain full ownership of your property, can live in it for as long as you wish, and have the choice of taking all your tax-free money in one go, or in smaller increments as and when you need it following an initial lump sum release.
By taking out a lifetime mortgage, you could remove the worry of regular bills and monthly payments and get to enjoy the later life you deserve.
Benefits of a lifetime mortgage
- You can unlock some of your home’s value to help with regular bills
- All of the money you release is tax-free
- You don’t have to make monthly payments unless you choose to
- You retain full ownership of your home and can stay in it for as long as you like
- You don’t have to take all your money in one go – you can save some for a later date following an initial lump sum release
- You’ll never owe more than the value of your home
- You can still leave a percentage of your home’s future value as part of an inheritance with some plans
Drawbacks of a lifetime mortgage
- Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits
- Your lifetime mortgage interest will roll up and compound
- You could face considerable early repayment charges if you repay your plan early
See how much you could release
See how much tax-free cash you could unlock from the value of your home with our free equity release calculator.
Using a home reversion plan to help with regular bills
A home reversion plan could help with the cost of regular bills. Like with a lifetime mortgage, it’s a way to release funds from your home’s value, there are no monthly repayments to worry about, and you can stay in your property for as long as you wish.
However, with a home reversion plan, you don’t retain ownership of your home. That’s because instead of securing a loan against your property – as you do with a lifetime mortgage – you sell part or all of it to a reversion company for a cash lump sum.
There’s no option to take the money as and when you need it – as there is with a drawdown lifetime mortgage – and you won’t receive the true market value of the share you sell.
However, a home reversion plan comes with no interest, as it’s not a loan, so you always know how much of your home’s value is still yours to pass on as an inheritance.
Mortgage Advice Bureau Later Life do not offer home reversion plans, only lifetime mortgages.
Benefits of a home reversion plan
- Receive a tax-free cash lump sum to help with regular bills
- No monthly repayments
- No interest added, as it’s not a loan
- Can stay in the property for as long as you wish
- You can still leave an inheritance by only selling part of the property
Drawbacks of a home reversion plan
- You will not receive your home's full market value on the part you sell to the reversion company
- It can be costly if you want to buy back the portion of the home you have sold to the reversion company
- It reduces the value of your estate and may affect your entitlement to means tested benefits
Helping you find the right option
If you’re thinking about unlocking funds from your home’s value through equity release, you’ll likely have many questions. As you should, it’s an important decision that you need to think about carefully.
It’s why we’re here to help. We understand equity release can be daunting, and it’s not suitable for everyone’s circumstances. But you can rest assured that we won’t recommend it unless we’re certain it’s right for you.
Also, we don’t charge for our services unless you decide to go ahead. Meaning, you can find out whether equity release is the right option for your needs before paying any fees.
See how much you could release
See how much tax-free cash you could unlock from the value of your home by using our quick and easy lifetime mortgage calculator.
Things to consider
- With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end.
- Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
- Mortgage Advice Bureau Later Life offer lifetime mortgages only, which is a loan secured against your home.
- Mortgage Advice Bureau Later Life offer lifetime mortgage products from a carefuly selected panel of providers.
- Unless you decide to go ahead, our service is completely free of charge as our usual advice fee of 1.5% of the amount released would only be payable on completion of a plan, subject to a minimum advice fee of £695.