Could your home increase your pension pot?

The cash tied up in your home could help you have the retirement you’ve dreamt about.

A growing number of homeowners are approaching retirement asset rich and cash poor, luckily retirees can now tap into the funds in their home to help achieve their retirement goals.

Whether it’s amazing holidays, treating your children or even buying a holiday home, a little extra cash in your retirement is no bad thing.

Over 55s typically have moderate savings but this group holds a staggering £1 trillion of housing wealth.

So, how can that wealth be unlocked?

One option is to downsize to a smaller property that will leave you with a lump sum of cash. However, many homeowners don’t want to downsize due to emotional attachment to their property or the lack of small, suitable property in the area.

Another option is to use a Lifetime Mortgage that offers a lump sum.
This type of lifetime mortgage is a loan secured against your home. It is only repaid from the sale of your home when the last surviving borrower dies or moves out and into long-term care.

If you’re worried that taking a lump sum isn’t the best idea for you then there is another option…

It is now possible to take out Income Lifetime Mortgages that provide you with an initial lump sum as well as a regular, fixed income.

With any Lifetime Mortgage, when you move into long-term care or pass away the money the house is sold and the money from the sale is used to pay off the loan.

Anything that’s left after the repayment goes to your beneficiaries.

If there is not enough money left from the sale, your beneficiaries would have to repay any extra above the value of your home from your estate. To prevent this from happening most lifetime mortgages offer a no-negative-equity guarantee (Equity Release Council standard), which means the lender promises that you, or your beneficiaries, will never have to pay back more than the value of your home.

Most importantly, with any financial planning, there is no one-size-fits-all solution and it’s always a good idea to seek professional advice first.

There is a growing number of equity release plans available which provides flexibility but also means research needs to be done to make sure you have the right plan for you.

Please get in touch if you have any questions.

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