While ‘spending the children’s inheritance’ used to be taken with a pinch of salt, many older people are releasing the money in their properties to enjoy it for themselves. Indeed, one in eight people taking out equity release are using the cash for holiday adventures, according to Retirement Advantage research. Other people intend to spend their nest egg on buying a car (9%) and investing in a new property (5%). However, the most common reason for applying for equity release was to carry out improvements to the home and garden.
Many people are sitting on a small fortune in their properties as values have risen sharply over the years. With equity release, they can obtain a lump sum or steady income by releasing the equity in their home. They then use the cash to maintain a decent lifestyle or for leisure pursuits. They can have the money available for holiday in a dream destination. Many people save up for an annual holiday abroad, but now, through equity release, there can be cash for holiday destinations they never dreamed of experiencing. So, if someone has a particular trip in mind such as a cruise or visiting the grandchildren in Australia, they can release cash in their home and start planning their trip.
Through equity release you remain in control of your property, but simply release cash and decide which option suits you best for paying the loan back. If you have been living in a property for several years and have paid off the mortgage, there is likely to be a sizeable difference between what you paid and what it is worth now. So, for pensioners or early retirees it makes sense to release cash from their home to do something special rather than surviving on their monthly pension.
Upon completing your equity release application process, you have a lump sum to enjoy as you see fit. Whether you want to set aside cash for holiday, to top up your pension each month, buy something special or share the windfall with your family, it is for you to decide.
If you would like some extra finance for security or to treat yourself, you can look at the different types of equity release and find out exactly what they entail. We always advise to discuss this with the family as a priority, as ultimately this will affect their inheritance. However, the decision is entirely yours and will depend on the family situation and is something your equity release adviser will help you with.