Freeing up capital in later life can be a practical way to access funds for various purposes, such as supplementing retirement income, covering healthcare expenses, or helping family members.
Equity release is a popular choice but gets a bad press at times as it’s not right for everyone. But first, let’s explain how it works: if you own your home outright or have a significant amount of equity, you may consider equity release or a reverse mortgage. These financial products allow you to access a portion of your home's value as a lump sum, regular income, or a line of credit while continuing to live in your home. However, your debt increases with interest added each year, you may be subject to early exit fees, and you can’t leave your home as an inheritance as it may need to be sold to repay the scheme provider first.
Here are some equity release alternatives to consider:
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Downsizing: If you own a large home, downsizing to a smaller, more manageable property can release equity that was tied up in your previous home. Selling your current home and buying a smaller one can provide you with extra capital to use as needed.
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Renting Out a Portion of Your Home: If you have extra space in your home, consider renting out a room or converting part of your property into a rental unit. This can generate rental income to free up capital.
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Selling Unneeded Assets: Evaluate your assets, such as vehicles, collectables, or holiday homes, and consider selling those that you no longer need or use to free up capital.
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Part-Time Work or Freelancing: Consider working part-time or taking up freelance opportunities in your area of expertise to generate additional income.
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Liquidating Investments: If you have investments, such as stocks, bonds, or mutual funds, you may choose to liquidate some of these assets to access cash.
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Annuities or Pension Release: If you have annuities or pension plans, you might explore options to release a lump sum from these accounts if it fits your financial goals and needs.
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Financial Planning and Budgeting: Work with a financial advisor to review your financial situation and create a budget that optimises your cash flow and identifies areas where you can cut unnecessary expenses.
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Life Settlements: If you have a life insurance policy that you no longer need or can no longer afford, you may explore selling it through a life settlement, where a third party purchases the policy from you at a discounted rate.
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Assessing Insurance Policies: Review your insurance policies and see if any can be modified or consolidated to release extra funds.
At Platinum Skies, we also think there’s another way, which is called shared ownership. Combined with downsizing your property, you can unlock money from the sale of your current home, which can give you financial security for the future. Speak to our friendly team to find out more about how it can work for you. Or you can read our blog all about shared ownership here.
