Homeowners looking to access money tied up in their property may consider several routes. A Lifetime Mortgage can allow eligible homeowners to release equity while remaining in their home, while downsizing may release funds by selling and moving to a lower-value property. The two options have very different practical and financial implications.
How Could Downsizing Release Money?
If you sell your current home and buy a less expensive property, the difference in value may provide funds after mortgages, moving costs, legal fees and any applicable property taxes are taken into account.
Why Might Someone Prefer To Stay Put?
Your home may be close to family, friends and familiar services, or it may have strong emotional value. Moving can also involve significant practical effort. For some homeowners, remaining in the existing property is an important objective.
How Could A Lifetime Mortgage Help?
For eligible homeowners aged 55 or over, a Lifetime Mortgage may allow some property wealth to be accessed without selling the home. The loan is secured against the property and is normally repaid after death or a move into permanent long-term care, subject to the plan terms.
What Are The Costs And Implications?
Downsizing can involve estate agency, legal, removal and property purchase costs. A Lifetime Mortgage involves interest and can reduce the value of the estate. It may also affect eligibility for means-tested benefits. Both routes therefore need to be considered beyond the immediate cash released.
Think About The Property You Need In Future
Future accessibility, maintenance, location and support needs can all matter. A smaller home may reduce running costs, while adapting an existing home may make staying there more practical. Your longer-term housing needs should form part of the decision.
Should Family Be Involved?
The decision is yours, but many homeowners choose to discuss later life housing and borrowing with family. This can help relatives understand the reasons, alternatives and potential effect on inheritance.
How HFA Later Life Can Help
HFA Later Life can discuss Lifetime Mortgages in the context of your wider options and explain the benefits, risks and alternatives clearly. Visit https://hfalaterlife.uk to arrange a no-obligation conversation.
FAQs – Equity Release Or Downsizing?
Is downsizing always cheaper than equity release?
Not necessarily. The full financial and practical implications of each option need to be considered.
Can I release equity and stay in my home?
A Lifetime Mortgage may allow eligible homeowners to do this, subject to advice, lender criteria and product terms.
Does equity release affect inheritance?
It can. The loan and interest reduce the value remaining in the property for the estate.
What costs can come with downsizing?
Costs may include estate agency, legal fees, removals and any applicable property taxes.
Should alternatives be discussed before equity release?
Yes. Considering suitable alternatives is an important part of later life lending advice.
Disclaimer:
Equity release includes Lifetime Mortgages and Home Reversion Schemes. We can advise and arrange Lifetime Mortgages and will refer to an approved specialist for Home Reversion schemes.
This is a Lifetime Mortgage. These are only applicable to those 55 and over, and it could affect eligibility to state means-tested benefits and the inheritance you may leave. To understand the features and risks, ask for a personalised illustration.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances and will be agreed with you before proceeding, but we estimate it will be £1,500 payable at completion for equity release products.
