01: Introduction

Many people, especially in older life, find themselves in a situation where they need more income or access to capital. However, they may have little in the way of assets other than their home.

A home can be used to generate capital and/or income in three ways:

• By selling it and moving to a less expensive home.
• By renting out the home – fully or in part.
• By accessing the equity built up in the property.

Equity is the difference between the value of your home and any borrowings secured against it, such as your mortgage.

Before considering equity release, it is a good idea to consider whether your need for capital or income can be met in any other way. In addition to the above, your options might include:

• Rearranging or selling assets or investments For example, you could sell a collection you have built up, or rearrange investments to produce more income – perhaps at the expensive of long term capital growth.
• Help from children or other beneficiaries For example, you may have decided to leave your home to a son or daughter. If they have the means, they may wish to gift or lend you money, knowing that in so doing the value of the family home is not being affected.

Selling and moving to a cheaper home may mean less upkeep (in maintenance and heating, for example), but some people have no wish to move home. Renting out spare rooms may appeal to some, but others may not wish to share their home with anyone else.

There is no right or wrong option – but it is important to consider all the alternatives to equity release as, in some cases, they may produce a better result.Last Updated