Homeowners are turning to equity release loans and finance more now than ever before. Property values are increasing and retirement planning is getting more complicated, so lots of people want to figure out the best way to get their hands on some wealth that’s currently locked up in their homes. As a solution for those who are struggling to access the funds tied up in their home, but still want to continue living in it then this could very well be an appealing financial product.

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What Is An Equity Release Loan?

Equity release scheme is a means for homeowners, aged 55 or older to release some of the property value (equity) without having to move out of their house. The two most common types of equity release are lifetime mortgages and home reversion plans. Lifetime mortgages, which allow homeowners to borrow against the value of their home while maintaining ownership and whose loan and interest are repaid when the property is sold or bequeathed, have quickly grown in popularity. Home reversion plans are also shared equity schemes where a percentage of the property is sold to a finance provider, who pay the money as lump sum or regular income and allow the consumer to remain living in their home.

This makes equity release a popular choice for retirees or those who want to boost their retirement income, do up their home or pay off unexpected bills.

Rising Property Values, Wealth Creation Opportunities

The increase in house prices over the last decade has led to of popularity for equity release loans and finance as one of the key reasons. Hysteresis means that many property-owning households have substantial wealth tied up in their housing (see chart), a lot of which they cannot use. Equity release is a means for homeowners to sell some of their property’s value for money – to have access without moving or downsizing.

Unlocking this equity enables people to finance life goals, work on debt pay down (other than the mortgage) and invest in opportunities that can provide financial stability. It's this access to property wealth which has made equity release so popular as a means of providing financial freedom in retirement.

Supporting Retirement Planning

Retirement planning has been complicated by increasing longevity and decreasing traditional pension provisions. For some retirees, having enough liquid assets to live the life they want is a concern. Working out: The Alternative Ways To Fund Retirement Release equity loans present a viable alternative enabling one to earn regular income that can make up for pensions, help pay medical bills and help family.

This characteristic of being able to tap into home equity is comforting for retirees, and allows them to stay living in the same home long term. The recognition of these benefits has helped to drive the popularity of equity release products.

Flexible Financial Solutions

Some percuniarisers may not enjoy the same flexibility as equity release loans and finance. Borrowers can receive payouts in lump sums, a line of credit or regular income stream, or a combination. Interest rates on lifetime mortgages can be attractive, with some products enabling you not to pay interest up until the term expires.

This flexibility can make equity release an attractive means of using the value of your home to meet a major financial need – such as funding home improvements, healthcare expenses or school fees for grandchildren – without impacting on longer–term plans.

Protection and Regulation

Solid consumer protection practices have also contributed to the growth of equity release. Regulated financial advisors and lenders are bound by strict criteria in many countries to make sure that anyone considering equity release is effectively aware of the implications involved. Counseling services from lending experts, who are able to provide impartial financial advice allowing homeowners to consider their options.

Such protections inspire confidence in homeowners, and re-assure them that equity release plans and finance can be a secure & flexibily safe solution to releasing the wealth from their homes.

Meeting Diverse Financial Needs

Equity release is no longer just for the narrow few. Today's retirees, empty nesters and older homeowners with substantial property assets are all beginning to consider these products for a variety of financial purposes. Whether it is help with travel, support for family members or reducing your debt; equity release offers a flexible solution and can be applied to fit different personal and financial needs.

The use of equity release for personal needs and in the way that best suits consumer goals and circumstances has made it an increasingly popular and flexible option for homeowners.

Conclusion

Since equity release loans have become increasingly popular as a way to offer liquidity, retirement options and financial products that are more flexible. With property values growing, awareness increasing and robust consumer protections in place, equity release has become an increasingly appealing proposition for homeowners who want to access the wealth tied up in their homes.

For those who want to achieve financial freedom but stay in their home, equity release provides a safe and effective route. Through knowledge of the advantages and options available, homeowners can make wise choices that improve their financial security and standard of living in retirement.

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