As you enter the later years of your life, you want to be able to wind down, relax and make the most of your spare time.

And once you stop working, you’ll find that you have a lot more of that on your hands. Which is all well and good, but if you’re not financially set up to enjoy the life you want to, then you’re bound to feel frustrated.

There’s no doubt that planning for your retirement is not easy, but there are ways that you can boost your income. One of those is downsizing your property, using the equity you have built up to purchase a smaller, cheaper home and use the excess funds to support your lifestyle. 

But that involves the stress of searching, buying, selling and moving, whereas equity release gives you access to that money while staying put. So, what are the available options and what are the benefits?

What Are your Equity Release Options?

There are two choices available to you if you decide to go down the route of equity release:

Home Reversion

This is where you sell all or part of your home to a home reversion provider. In return, they pay you a lump sum or regular instalments. You can set aside a proportion of your property’s value, for example if you wish that to be passed onto your loved ones as inheritance.

It’s important to remember that a home reversion will not offer the true market value of the property because you are choosing to continue to live in it, rather than sell on the open market and move out.

Equity Release Mortgage

The alternative option is an equity release mortgage, of which there are two kinds:

• Lump sum lifetime mortgage: This allows you to release some of the funds, tax-free, that are tied up in your home. As the name suggests, the money is paid in a lump sum and is repaid (plus roll up interest) when the plan finishes. This is usually when you or the remaining borrower passes away or goes into care.

• Drawdown lifetime mortgage: This is slightly different in that you receive a smaller lump sum up front and then further instalments as and when you need them. Again, the loan plus the interest is repaid when the plan comes to an end.

What are the Benefits of an Equity Release Mortgage?

• Receiving tax-free funds

• Able to stay in your home

• The ability to make repayments if you choose to

• Retain full ownership of your property (with a lifetime mortgage)

• Ring-fence a percentage of your property’s value

• No-negative-equity guarantees

Of course, as with any financial product, it’s important to weigh up your options carefully. It’s recommended you seek professional advice to make sure your decision is best suited for your needs.