Determining the Appropriate Solution for Young People Who Want Equity Release
Can young people get equity release? It’s a question that many are asking as they look for ways to supplement retirement. Equity release is not just for the elderly, but can be used by younger people as well. Learn more about who can apply and what equity release entails in order to decide whether it is right for your situation!
Equity release was once seen as an option only for older homeowners but it has been extended to cover younger generations too. “Equity release” means that a person borrows against their property or its future sale proceeds at low rates of interest until they die either spouse passes away. In this way, some retirees use all their assets—including those tied up in the family home that cannot be used while living there.
There are four types of equity release – lifetime mortgages, annuities with a lump sum payment in advance, pensions and interest-only mortgages.
Lifetime mortgage is the most common type among those under age 65: it offers access to cash without having to repay any capital or interest until the death of either spouse.
Annuity with a (lump)sum payment in advance provides an income for life but does not allow access to capital that has been drawn down during retirement.
Pensions provide regular payments throughout retirement while also permitting limited withdrawal from funds; they can be paid by defined contributions or earnings related schemes and have tax advantages because these payments generate pension credits which reduce future taxation liability.
Interest only loans offer flexible repayment on fixed sums over time which you can decide how much to pay, rather than being forced to repay the whole amount.