Can I use Equity Release to buy a new home? The simple answer is ‘Yes!’

9th March 2020

Despite popular belief, Equity Release is not only for raising money against your current home. It can be used to help you purchase a different property and if needed give you the money you need to carry out any necessary or desired renovations.

Many people are surprised to hear that if you choose to release equity from the home you live in now, you can use the money you unlock from that property to help you buy a different home. Despite popular belief that you have to stay in the home you release the money from, Equity Release is becoming an increasingly popular way for over 55s homeowners who want to move to a new house but don’t have all the funds to do so. You simply transfer the equity across to the new property to assist the purchase.

If you are not familiar with a Lifetime Mortgage, the most common form of Equity Release, it is a loan secured against your property, for an indefinite term, at a fixed rate of interest for life. The property it is secured against can be your current home, or a new house you wish to purchase.

To illustrate this, here are some real-life scenarios from clients:

Relocating from overseas and buying a new UK property

A couple in their 60s, who had sold their property in France to move back to England, wanted to buy a house in the South West. Unfortunately, they did not have enough money from the sale of their overseas home combined with their savings to buy their new dream home in the UK. They decided that in order to find the funds, they would release equity from the new home they had not yet purchased to enable them to buy it.

This couple understood the concept that Equity Release is very similar to a regular mortgage but rather than being based on affordability criteria, it is a loan to value against their new property. They have chosen to pay back the interest in regular installments like traditional mortgages and will very soon be moving into their new dream forever home, thanks to the funds Equity Release has given them.

Downsizing to a home in need of improvements

A couple in their later 60s recently retired and wanted to move out of Greater London. They still have a mortgage but would like to get rid of it, as the monthly payments are a bit of a burden on their new pension income. Their current home should sell for £1.6million and they found a country cottage for £1.2million. The £400,000 difference is enough to repay their mortgage, cover the stamp duty and absorb all the moving costs. But the cottage could do with some modernisation and some new wiring.

A Lifetime Mortgage allows them to raise money for some immediate improvements without having to worry about monthly repayments. It also provides them with a ‘Reserve’ they can draw down in the future if they find other things that need doing.

As you can see, there are so many options available to you with a Lifetime Mortgage. Some choose to pay back the interest on a regular basis; others choose to let the interest roll up so they don’t have to make any monthly repayments leaving the interest and the loan to be paid off when the house is finally sold. The beauty with Equity Release is that there are so many products available on the market that there is sure to be one to suit your personal circumstances.

If you are interested in using Equity Release to purchase a new home, it is important that you speak to an experience qualified specialist like Kevin Woods. Firstly, Kevin will advise whether Equity Release is right for you, then he will work tirelessly to find the best product on the market to fulfil your personal, financial and lifestyle needs.

Contact Kevin now on 01489 232036, or at kevin.woods@therightrequityrelease.co.uk for a free consultation without fee or commitment of any kind.

Your dream home could be simply a phone call away.

Why not get in touch and see how we can help?

Equity release is the answer to so many financial questions. If you would like to know more about it, and see if it could be the right move for you, please book an appointment or request a call-back

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