Releasing capital might be a good idea if you're 55 or older and you want extra money for retirement, home or garden improvements, or perhaps to help the family financially. A capital release mortgage has no monthly payments and allows you to access your home's tax-free cash without having to move. The release of capital can provide a useful way for older homeowners to access the equity accumulated on their property. It won't be right for everyone, but under the right circumstances, the capital release could be used to supplement your pension income or provide a lump sum, all while you live in your home.
Releasing capital can provide you with a large sum of money to spend and at the same time allow you to continue living in your home. It can be particularly useful to cover large expenses later in life, such as long-term care. However, there are downsides to accessing the value of your home in this way. Releasing capital may be a good idea for seniors who want to earn some extra money in retirement.
Freeing up capital can help you make improvements to your home, pay for care costs, help a loved one who is struggling financially, or pay other debts. Capital release refers to a range of products that allow you to access capital (cash) immobilized in your home if you are older. Using capital release to earn additional income or a lump sum will also mean that your family will have less to inherit. You will need to have full knowledge of the capital release before accepting one of these products, as they are usually established for life.
Before you apply for a lifetime mortgage or housing reversal plan, you will first need to seek advice from a qualified advisor on equity release. With the capital release, you also don't have to worry about making monthly payments, as the amount borrowed can be repaid by eventually selling the property after you die or move to a care facility. So, to get a better idea of whether capital release is for you, we suggest you have a friendly conversation with one of the equity release experts we work with. Whether the capital release is right for you will depend on your circumstances, as there is a lot to consider.
As a general rule, you can take the money you release in a single sum, in smaller amounts over time (known as a drawdown), or as a combination of both. If you are over 55 and own your property, equity release can help you unlock money from your home that can be used for many purposes. It is important to remember that any type of capital release can affect your tax situation and your eligibility to receive income controlled benefits, both now and in the future. Choose the Right Way to Release Equity for You and Your Family Whether a Lifetime Mortgage or Housing Reversal Plan is in your best interest will depend on a wide range of circumstances, such as how much you expect to leave your family as an inheritance.
When freeing up capital, it's tempting to focus on the immediate momentum you'll get from the money you unlock, but you need to look at how it will affect your future choices and your financial situation going forward. With any form of capital release, ask your independent financial advisor or mortgage broker to explain the risks in detail, including how much it could cost your family in the long run and whether downsizing might be a better option. The amount you can borrow is usually between 18 and 50 percent of the total value of the property; in general, the older your age, the more you can free. It is natural that you want to answer the question “how safe is the release of capital or is the release of capital safe.
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