Equity Release: Should you upsize in retirement?

By John Cossons, Equity Release Adviser.

This article is based on a recent equity release case that I completed.

A 71-year-old client of mine had sold her property and was looking for a new house closer to her family.

In an ideal world, she would have loved to buy a bungalow. However, she did not have enough capital remaining to do this. Instead, she was looking for a terraced house within her budget. Additionally, this was not in the area she was after.

She had £120,000 cash available from the sale of her property but required at least £140,000 for a terraced house. She contacted me to see if I could help her raise the additional £20,000.

So what was the solution?

After our initial discussion, she found that not only could she raise the money requested but that she could look at the type of bungalow that she also really wanted. Armed with this information, a short while later found a fabulous bungalow priced at £155,000. The property required redecorating and bringing up to date and once the work is completed will be worth around £175,000.

Setting aside £10,000 of her available capital for the renovation work, she used the remaining £110,000 and a £45,000 Equity Release lifetime mortgage to purchase the property electing to roll up the interest payments meaning the client did not have the monthly commitment of this. She also has the peace of mind that she has a further £4000 available to her as a drawdown facility should the renovation costs run over.

My client was initially concerned that if there were a slump in property prices in the future she may not be in a position to leave an inheritance to her next of kin. However, the lifetime mortgage that was recommended gives her this peace of mind. It allowed her to leave her next of kin a guaranteed minimum of 10% of the sale price of the property when she dies or goes into long-term care.

With a simple application process and minimal paperwork, the time taken from the application to offer was only 12 days. I am glad to say she is now choosing her new kitchen and planning the redecoration to her own tastes.

How Equity Release Kettering & Corby can help you.

We are Independent Financial Advisers (IFA’s). This means that the advice we offer you is unbiased.

Equity release is not right for everyone. You need to be over the age of 55 and own your own property. If you have a family it is always a good idea to get them involved.

Meetings can be arranged at your home or at our office based-