When people need to borrow large sums of money, many people turn to equity release which can be a smart way to get your hands on a large sum. Essentially, equity release is a way to “unlock” the value of your property while you still live in the home. Equity release can be a great option for many, but it is always a big decision and one that should not be made lightly.
Reasons to Use Equity Release
There are many reasons why people might opt for equity release. They might use it for a more comfortable retirement, to improve the home or manage unsecured debt. Interestingly, it seems that one of the main reasons that people opt for equity release is to help loved ones to buy homes. Will Hale, Key Advice, CEO commented:
“Big-ticket items like repaying outstanding mortgages, managing unsecured debt and helping family members get their foot on the property ladder is what motivates customers”.
Many Struggle to Buy
This makes sense because many young people are struggling to get their foot on the property ladder and find themselves in the difficult cycle of renting and struggling to save up to put down a large enough deposit (and cover various other costs). Equity release can be a great solution and allows parents to help their children to get a foot on the property ladder.
Benefits of Home Ownership
It is difficult for many to afford to buy, but there are many perks to homeownership that people should consider and it should be viewed as a long term investment. Obviously, rising house prices are one of the main benefits and can be a smart way to increase your wealth over the years. Additionally, the earlier that someone buys, the younger they could be mortgage-free and this could make a big difference to their life down the line.
Renting
As mentioned, the renting cycle can be tough and it is, essentially, dead money. You are paying off the landlord mortgage while still owning nothing and renters have very little security. Additionally, renters cannot decorate or modify the property, so it is understandable that so many people want to buy and get their foot on the property ladder. Even those buying with someone else and on a decent salary can struggle, especially when the cost of living is so high. This means that equity release is sometimes the only viable option and can be a great gift.
Equity release can work well as a way to access a large amount of money and is often the best solution for helping a loved one to get a foot on the property ladder. While it can sometimes be a good solution, you always need to weigh up your options and speak with a specialist to see if it is a good option for you.
Article by Born Realist