Why released equity is being used for many different property funding needs

19th January 2016

Equity release is increasingly described as retirement lending: the products themselves are evolving, as are clients’ reasons for choosing to unlock these assets.

More and more I see released equity being used to fund a property purchase by the client or a member of their family, or to pay off a mortgage. This is usually to allow the resident to remain in their home when it would otherwise be repossessed.

In other cases, divorce is the catalyst. Unfortunately, divorce levels in the UK remain high. I am seeing parents and grandparents releasing equity in order to funds deposits for children or grandchildren so that they can buy rather than rent. I am also seeing older relations gifting first time buyers in their families the deposit on their first home.

Increasingly too, parents are following their children to different areas of the country: this may require them to downsize if the area is more expensive. A Lifetime Mortgage can help maintain their standard of living, even in a more affluent location.

Many people are also buying second homes, both in the UK and overseas, often through retirement lending. Other European countries are not experiencing the same property inflation as we are, and some of my clients want to take advantage of these lower prices in warmer climes.

Finally, retirement properties, whilst offering enhanced security and quality of life, can often be expensive to purchase from new. In addition, they often feature significant service charges because of the supervision and facilities on site. Some lenders will let you use their Lifetime Mortgage product to buy a retirement property. In addition, a cash reserve facility may be used to fund the maintenance charges, if your income will not cover those ongoing costs.

Family wealth locked up in property is a sensible financial planning asset for the right customer, but as always, because of the uniqueness of every situation and the variety of products on offer, professional advice should be sought.

If you have any questions about the subject matter of this blog, or would like more information on any equity release related point, please do not hesitate to call me on 01489 45 45 45, or to contact in any of ways highlighted on this website.

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