When considering Equity Release you can only do so when you are close to or beyond retirement age.
This means we can directly align the use of an Equity Release product as a part of an overall retirement plan.
Equity Release can be described as the conversion of your property asset value into cash or income.
There is something very special about this in financial planning terms, because your home can be viewed in two ways, which are NOT independent of each other. One is it is a place to live, so its acts as a form of utility. This is a way of saying that you use it for a purpose, i.e. as a home. The other is as an investment.
When you are considering what to do with your savings, whether to invest in shares or to have the money in a bank, for example, you have no utility aspect to worry about. It’s a decision process without this added complication.
Any asset value in your property is part of your overall wealth, and is, in many ways, an investment. The rise and fall of this investment will be in line, to some extent, with the overall performance and trend of property values in your region.
Through retirement you will, hopefully, have a long period to fund your retirement expenditure. That investment could contribute to your standard of living in retirement, if you were to arrange a conversion of the property asset value into cash or income.
You can start to see therefore that this is a complex balancing act between various different considerations, you need to live somewhere, you have options as to how to allocate any asset value you have, you need to weigh up property values in terms of the future trends, all at the same time as you want to enjoy your one and only retirement. You may have to fund care costs at some point and you probably have no idea how long you will be retired for.
This is why Equity Release is a very different financial planning conundrum than deciding which car insurance to select or which ISA to use.
Equity Release can be an amazing solution, but also a poor decision, it all depends not just on your circumstances, but also your wishes, desires and lifestyle needs. Plus, your appetite for risk and your attitude to where you want to live both now and in the future.
There is no area of financial planning where getting advice has a greater value.
Equity Release
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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