192018Jun
family around a breakfast table

How are my family affected if I choose to release equity?

Family is important to all of us. When considering a life-changing financial decision such as equity release, it’s best to understand how they could be affected.

Involving the family

Ultimately, releasing equity from your property is your own personal decision. Once you’ve had a discussion with an independent adviser, you should be in a position to make a choice that’s right for you. But, a good adviser will usually recommend that you consult your family and discuss with them your plans.

The advisers at Bower Retirement offer a face to face consultation, to which you can invite family members along. It’s completely up to you, but it can be a good idea to include your family, such as your children, in the process. This saves any sudden shocks later down the line as it will affect the inheritance you leave behind. It gives them a chance to understand the process, and they may also be able to help you come to your decision.

It’s also worth mentioning to family, as in circumstances where you only need a small amount of money or you’re not eligible, then borrowing from a family member could be an alternative to equity release for you.

Family you live with

If you are married, in a civil partnership or living with a partner, so long as you are both eligible by age then you will be able to take out a joint plan. Meaning should one of you pass away or go into long-term care, the remaining partner has the right to remain in the property.

However, if they are not on the plan, then in these circumstances, unless the mortgage can be repaid in full, the property will have to be sold. This means your partner will have to find somewhere else to live.

If you live with a family member such as a son or daughter or carer, they will also be affected. Most lenders would insist that the occupier signs a waiver, confirming that they will move out should you die or move into long-term care (meaning the loan is repayable).

Inheritance

One of the questions most commonly asked during an equity release appointments is: “Can I still leave an inheritance for my loved ones?” In short, the answer is yes. But releasing money against your property will decrease the amount of your estate and ultimately, the amount you leave behind.

However, with some plans, it is possible to protect an element of equity as an inheritance. Or you could have the option of an interest payment plan, so the loan will not build up. Be sure to ask your adviser about these safety features, as many leading equity release providers offer them

Living inheritance

One of the main reasons people release equity is to help their family. By accessing the money tied up in their property they then gift it to family members as a “living inheritance”. In May 2018 Bower Retirement saw 11% of their customers release equity for this exact reason.

For some, it’s a way to help a child or grandchild with a deposit for their first house. Others help to pay off a student loan, or pay for a wedding or even to help a child with paying a divorce settlement.

It’s a way to help the family out while you’re still around to see them enjoy it.

The family home

A house can be more than bricks and mortar. It’s a home and it can hold a lifetime of memories.

You may have started your family in the same house you’re in now. Then raised your children there and now have the grandchildren over at the weekends. The thought of downsizing to release some extra cash might not be something you or your family would want you to do as they too will hold fond memories.

With equity release, you can access the cash tied up in your home while being able to remain living there for the rest of your days. Some people use the money they release to invest back into the property by carrying out home improvements. While others simply use the money for extra income to support retirement while being able to remain in their home.

It enables you to live comfortably in the house you and your family love. If later down the line you do decide to move house, you can take your plan with you.