Equity Release – the best gift you could give to your children

27th March 2019

Nowadays, stepping onto the property ladder for many people seems out of reach due to the recent rise in house prices alongside a sluggish growth in wages. However, the money you have invested in your own property over the years could be released to help someone you care for buy their own home for the first time.

Ask most parents what they want for their children and they would most likely say for them to be happy, healthy and financially secure. Financial security often means having a well-paid job and your own house to live in. Yet nowadays, stepping onto the property ladder for many people seems out of reach due to the recent rise in house prices alongside a sluggish growth in wages. Most mortgage lenders would lend you on average 4 times your single or combined spouse salary, and for many people nowadays this just isn’t enough to purchase a property. The shortfall seems to be in the ability to put down a larger deposit – and this is where the ‘Bank Of Mum And Dad’ could help out.

The BANK OF MUM AND DAD – the new major lender in UK housing.

This year the Bank of Mum and Dad will support 316, 600 loved ones to buy a home injecting £5.7bn* into the housing market. In fact, last year 59% of under 35-year olds, 43% of 35 – 44 year olds and 26% of 45 – 54 year olds** would not have been able to buy a house without the financial help of a parent, relative or friend in this way.

If a willing contributor has accessible savings to contribute to a deposit then this could be the answer to the deposit problem. Nevertheless, realistically we don’t all have a hidden pot of money at our disposal to use as we please. Or do we? If you own your own home, are aged 55+ and live in the UK then the money tied up in your home could be released to assist a loved one in purchasing a family home of their own.

Equity release – help your loved ones get onto the property ladder.

One tool that remains significantly under-utilised in financial gifting is Equity Release. If you are a home-owner then you could release some of the equity in your property to gift to a loved one to help them buy their first, or even second home. In fact, it remains the principal reason why over 55-year olds would consider equity release***.

So how does it work?

It’s easy. Equity release can involve taking out a Lifetime Mortgage which allows you to release money from your home without having to move. It’s a loan that is secured against your property, at a fixed rate of interest that can be taken out either as a lump sum or spread over a number of years using a drawdown facility. Like a traditional mortgage, you can choose to pay back only the interest on the initial loan or pay back both the interest and the capital in regular monthly instalments. However, unlike traditional mortgages you also have the option to let the interest roll up and you never have to pay back the loan. The cost of the loan is simply taken back from the value of your estate when you either die or go into long term care. Whatever Lifetime Mortgage plan works best for your personal circumstances there will always be a ‘No Negative Equity Guarantee’ meaning that you will never owe more than the value of your estate and you can stay living in your own home for as long as you choose.

Equity Release – the best gift you could give to your children

The first step onto the property ladder has always been difficult but in today’s financial climate it seems to be further out of reach for many than it ever has been. If gifting to your children through Equity Release is something that you would like to consider, in order to help them make that incredibly difficult leap onto the first rung of the housing ladder in a seemingly impossible housing market, then why not contact Kevin Woods on 01489 454545, or at kevin.woods@therightequityrelease.co.uk to discuss your situation in confidence and without charge or obligation of any kind. After the gift of life, it could be the best gift you will ever give to your children.

*/**survey of over 1,000 UK adults commissioned by Legal and General in April 2018. Cebr analysis
***survey of over 2,000 adults commissioned by Legal and general in April 2018. Cebr analysis

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