Equity Release Alternatives
Equity release is a major decision that requires careful thought. Before committing to equity release, consider these alternative options that might better suit your situation.
UK home values have significantly increased in the past decade
This is excellent news for those seeking a cash boost in later life, including new and existing equity release customers.
However, equity release isn’t suitable for everyone, so exploring alternatives might be a better option for you.
Use your savings
Using them could be more cost-effective than equity release if you have substantial savings.
The main advantage is avoiding interest payments on a loan. Plus, other options will still be available if you need more money later.
However, you might prefer to keep your savings untouched for emergencies, like car repairs or a broken boiler.
In that case, consider one of the alternatives to equity release below.
Sell assets
Selling some belongings can be an excellent alternative to equity release, especially if you don’t need much money.
This doesn’t mean parting with your home or precious family heirlooms.
Many people have items in their loft or garage they no longer need.
Local car boot sales or online platforms like Vinted are great for smaller items and clothes.
Consider consulting a local auction house or specialist for larger or more valuable items.
Equity release alternatives video
Watch the video below to see what ‘MoneymanTV’ has to say about the alternatives to equity release:
Accessing grants
If you need money for home adaptations, such as making your home more accessible, look into grants and charities that can help.
Here are some resources:
- Disabled Facilities Grants. Your local council may provide grants for significant adaptations like stairlifts and ramps. Learn more
- Independence at Home. This charity offers grants for people with long-term illnesses or disabilities needing home adaptations. Visit their website
- Home Improvement Agency. They offer various schemes to help with home adaptations, repairs, and making your home more energy-efficient. Find more information
Check your benefits entitlement
Ensure you’re receiving all the government support you’re eligible for. Many people miss benefits due to a lack of knowledge or reluctance to ask.
Visiting entitledto.co.uk can help you check your entitlements.
For example, pension credits can significantly boost your income and qualify you for additional benefits like a free TV license and council tax reductions.
Remortgaging
If you have a mortgage, remortgage could help you finance home improvements, pay off debts, or make large purchases.
Start with your current lender or consult an independent mortgage adviser to find the best deal.
Remember, remortgaging may increase your monthly payments, so ensure your finances can handle the extra pressure.
Affordability checks may also be a barrier to retirement.
Retirement Interest-Only (RIO) Mortgages
A RIO mortgage lets you unlock a lump sum from your home and make monthly interest payments.
The capital is repaid when your plan ends, usually when you pass away, and your estate settles the loan.
This option requires consistent interest payments, and failure to do so could result in losing your home.
Downsizing or moving to a cheaper property
Selling your home and moving to a smaller or less expensive property can free up equity.
This popular alternative to equity release lets you find a new home that better meets your needs.
Be mindful of costs like removal fees, legal fees, and stamp duty, which can reduce your total sale proceeds.
Ask family and friends
Discussing your financial situation with family or friends might lead to offers of help. They might support you financially or assist you in exploring alternatives to equity release.
A short-term loan from loved ones could provide interest-free lending, saving both parties money in the long run.
Take in a tenant or lodger
Renting out a spare room can provide extra income. The government’s Rent a Room Scheme allows you to earn up to £7,500 per year tax-free by renting a furnished room.
Be sure to vet potential tenants thoroughly and understand your rights under the scheme.
Making the right decision for you
After considering these alternatives, weigh the pros and cons of each option and equity release.
Speaking with a qualified adviser can provide tailored advice for your situation.
Find an adviser
Find a qualified and regulated equity release adviser using the Equity Release Council’s register.
How much can you release?
You can usually release a minimum of £10,000, but the maximum amount varies based on several factors, such as your property's value and your age.
Typically, the older you are, the more you can release.
Are you looking for a quote?
While we do not provide a quote or call-back service as our website is purely informational, we understand that some people do want an equity release quote.
Get Started
To find out how to get the best equity release quote read our guide
