Is equity release a good alternative to downsizing?

Last Modified 16th of February 2021

If you are approaching retirement or already retired and wondering whether your amassed pension savings and other investments are going to provide you with a comfortable enough income for your retirement, then the thought of downsizing may have occurred to you.

Why do people downsize their property?

Often people whose children have left home think that the best solution is to move to a smaller place that is cheaper and easier to run and will allow them to free up some of the equity that they have stored in their property. However, the downside to this is that they have less space for their family to come and visit and they often end up moving to a different area so that they have to make greater efforts to stay in touch with existing friends. Although people are aware of these consequences before they downsize, the reality can be a bit hard to deal with and some people regret their choice to sell up their family home.

With the general increase in property values during the last few decades, it’s unsurprising that more people are choosing to stay in their well-loved home and to take out equity release plans instead of moving to somewhere smaller.

What is equity release?

Equity release is a way of freeing up the financial value stored in your home without having to leave it.  The idea is simple in principle; you can take out a lifetime loan or sign over partial or full ownership of your home while retaining the right to live there for the rest of your life, in exchange for a cash lump sum.

Instead of providing equity release directly, the company will advise its clients on whether this is the best option available to them and will then search the equity release market on their behalf to find them the best deal.

This takes out the hassle of having to generate a number of quotes yourself and the team of advisors will be happy to explain the terms and conditions attached to equity release plans before you decide to go ahead. Equity release isn’t suitable for everyone, so you should really make sure you understand the consequences before going ahead and entering an agreement.