The number of people taking out equity release plans across the UK rose by 3% in 2021, in comparison with the previous year. Equity release is a system for releasing cash from your home, without having to move out of your house. People often choose to take out an equity release plan to offer financial support to someone else, usually a family member.
There are a range of different ways you can use equity release to help your loved ones. The most popular choices appear to be helping a family member purchase their first home and passing on money to help a family member launch a new business.
Here, we outline a few different ways you can use equity release to help others.
Help family members get on the property ladder
CEO of Key Advice, Will Hale says, “Big ticket items like repaying outstanding mortgages, managing unsecured debt and helping family members get their foot on the property ladder is what motivates customers.” This highlights that a significant number of Brits are using their equity release to help others buy their first property.
With house prices rising across the UK, it’s becoming harder than ever for young people to buy their first home. Due to this, you may wish to take out an equity release plan to offer financial support to your child or grandchild and help them achieve their goal of homeownership sooner.
Help family members start a business
Starting a business can be a costly venture and getting a loan to launch a start-up isn’t always possible. Depending on the nature of the business there may be the cost of renting a space, monthly overheads, investment in specialist tools and equipment, computers… and the list goes on.
If you’re in a good financial position, you may want to help a family member with the costs associated with starting their business by taking out an equity release mortgage on your home. You may also choose to use the equity release to obtain money which you can lend them for their start-up costs, with the agreement that you are paid back when they begin making an income from trading.
Paying off mortgages
Paying off a mortgage can take decades and is particularly stressful if the homeowner has lost a significant amount of income, on which they rely for making their monthly mortgage repayments. As many people were made redundant or furloughed during the pandemic, a huge number of households faced a notable drop in income.
If you have the financial means, you could use an equity release plan to pay off mortgage payments for a loved one who has found themselves facing hardship as a result of the events from the past few years. It’s believed many people in the UK have used this tactic recently to prevent relatives from losing their homes.