Pensioners urged to seek advice before releasing capital and spending inheritance funds | Personal Finance | Finance

As more Britons free up equity from family homes to help them make ends meet, experts are warning retirees to think carefully. There are a few other things you can do to free up cash.

Although the real estate market is buoyant, experts warn that more and more retirees are being forced to use the capital release.

The average share release transaction is £125,000 according to data from the Equity Release Council.

This adds up to seven years of a typical person’s retirement income.

David Burrowes of the Equity Release Council said: “After years of putting money away in bricks and mortar, older homeowners are turning the tables and taking funds out of their homes to boost their retirement income, cover one-time costs and give a living inheritance to the family”.

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He continued: “With £1m being added to UK home value every minute last year, the options that real estate wealth offers will be on the minds of many when they make financial plans for the future.

“The return to growth of the equity release market is part of a broader uptick in lending activity in old age, and the flexible design of modern lifetime mortgages gives customers more ways to manage their finances and access life-changing sums of money at a lower cost. .

“While many aspects of today’s marketplace have been transformed in the 30 years since consumer warranties were first established, the firm foundation remains in place so that no customer has to worry about owing more than their product is worth. home and you can rest easy knowing you can stay in your home for life with no threat of repossession for missing payments.

“As we move into an environment of increasing cost-of-living pressures, the importance of sound advice will be greater than ever so that decisions to release capital continue to provide long-term satisfaction and short-term relief.”

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Meanwhile, homeowners with equity release schemes could save more than £50,000 by switching to a cheaper plan.

Interest rates have been cut in half in recent years, but many people don’t realize they are free to switch.

Age Partnership CEO Matt Stirland said people could save big by switching providers.

He said: “Age Partnership customers who switched plans last year will save a staggering £51,000 in interest over the average 16-year term of their plan.”

Retirees should weigh their options when it comes to freeing up capital and also consider downsizing, according to money-saving expert Martin Lewis.

Lewis said the easiest and cheapest way for retirees to free up money was to move to a smaller home.

I was responding to a caller named Dee on This Morning in December who asked, “How can seniors who have mortgage-free homes free up some of this capital to spend on themselves instead of struggling for years to come?” later?”

Martin said: “I always started by saying look to see if you can reduce the size.

The financial journalist continued: “That is the easy and cheap way for many people.

“Move to a smaller house, and because you’re moving to a smaller place, you free up capital that way.”

Mr. Lewis explained that he has never been a big fan of equity release mortgages, although he understands that at some point they are a necessity.

He concluded: “If you’re going to do that, take as little as you need when you need it.”

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