Equity Release plans – their attractive features
- They can give a lump sum, a regular income or both. The lump sum could be tens of thousands of pounds; the income boost might be worth as much as a hundred pounds a month or even more.
- Money released from the value of your principle residence is free of tax, although if the cash is then invested there may be tax to pay on any income or growth.
- You don’t have to move house or sell your home to unlock equity. With reputable equity release schemes there is a rock-solid guarantee that you will be able to continue to live in and enjoy your home until the day you die – and in many cases still be able to leave something of the property’s value to your family.
- Of course, if you don’t have children or family to leave your property to, then equity release might seem an even more attractive concept.
- They can also be a way of cutting inheritance tax bills. Inheritance tax kicks in at 40% on everything left behind over £325,000 (2011/2012). Importantly, that figure includes the value of your home.
- The value of many properties means that IHT is no longer something only the rich have to pay. Equity release plans are a perfectly legal way of mitigating inheritance tax. They could be used, for example, to give a child or grandchild the deposit to buy their own property.
- They can also be used to pay for care bills without having to sell up at what can be a traumatic enough time.
Equity release will not suit everyone. It is always worth considering whether funds could be raised affordably from other sources before going down this route.
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