What are the benefits of taking out an Equity Release Lifetime Mortgage?

With the recent financial & economic turmoil, equity release schemes are gaining greater popularity due to their myriad of benefits. Mentioned below are some of the beneficial ways in which you can spend the tax free cash wisely.

Clearing your debts
One of the most common reasons for getting advice on equity release is for debt consolidation. More debt than ever is being carried into retirement, which in combination with a reduction in income can be a recipe for financial ruin. Therefore, if retirement income will not be sufficient to meet monthly obligations, then the situation should be addressed as soon as possible.

Assuming all alternative options have been eliminated, then equity release schemes can be considered to clear debts. These debts could be a mortgage, possibly due to failure of the endowment policy. Credit cards tend to be the devilment of many in retirement & excessively high interest rates render the repayment extremely difficult. Personal loans, hire purchase agreements, even catalogues can be cleared by equity release plans.

The consequences of clearing such liabilities will be the reduction in outgoings as the monthly payments will no longer need to be made. In conjunction with the fact that no monthly payments are required on an equity release loan, the effect is an improvement in the household family budget, thereby alleviating retirement finances & possibly stress!

Home improvements
Taking equity out of the property to put back in cannot be a bad idea, especially if it were to improve the value of the house at the same time. Once retirement is reached, people often consider ‘out with the old, in with the new’ & what better time to start afresh than when reaching retirement age. However, the main obstacle preventing this could be available cash. Lifetime mortgage deals would release cash for this purpose & help fund a new kitchen, bathroom, furniture, carpets, driveway, landscaping the garden or way other redecoration or structural purpose. All these hold the benefit of maintenance & property improvements which will carry them then through their retirement.

Whether in the UK or abroad, what better way than to unwind. Again, though finances may have dwindled leaving the emergency fund in the bank or building society at its minimum. A drawdown equity release scheme can help here by releasing cash on an ad hoc basis whenever funds are required. This could be for the annual holiday or the one off’s, those spur of the moment ideas that arise. With quick access to the remaining equity release cash reserve, those worries over payment for the vacations can e a thing of the past.

New Car/Caravan
We are all aware that motor vehicles don’t last forever, or if they do they can become expensive to maintain & run with the price of petrol today. Up grading to a low emission small family car can remove concerns over expenses such as MOT’s, license duty & petrol costs. Additionally, more people seem to be taking holidays in the UK, possible due to expense of travelling abroad with flights or seniors travel insurance costs these days. Therefore, more people are investing in a caravan, mobile home or even motor home so they can enjoy the fruits of their retirement.

Investing in stocks
Investing for your children or grandchildren on the stock market is one way to try and ensure that the extra cash it utilised to its true extent. By investing in stocks & shares you can hopefully ensure the financial security of your children and grandchildren. By investing for their future, you maybe are looking to make an early gift for their inheritance, or even assist with your own inheritance tax planning.

Investing in a new business
Investing in a new business is another option. This could be for you or to help family members with a new business project or invest into an existing business. Doing so could ensure rich dividends.

Equity release schemes can be an excellent idea, especially if you want to enjoy a hassle free retirement. However, they are not always suitable for everybody & recommendation should only undertaken once all the alternatives have been discussed with a suitably qualified independent financial adviser