Alternatives to Equity Release
What are the Equity Release Options?
Although there're thousands of people that use equity release loans to finance activities like home improvements and to repay outstanding debts- it's not the best preference for everybody.
Financial freedom may understandably be a goal for everyone. Still, you must browse and understand all your alternative options before you choose to take out an equity release as a source of income for you to raise money.
Below are the ten best alternatives to equity release:
#1. Re-mortgaging
You must contact your equity release broker and find out their extent of flexibility regarding you extending your standing mortgage agreement with them.
Even more to that!
Another excellent option is getting a Retirement Interest-Only Mortgage: which could go on for the rest of your life. They will only require you to pay monthly interests to keep your debt level.
Just think of it:
Your estate repays the mortgage like it's an equity release.
#2. Consider A Less Expensive Home
You may also make considerations of moving to a more affordable property via a classic 'downsize'. Downsizing can serve as your primary option before taking out an equity release. Downsizing might draw other costs: some agent fees and moving costs, or Stamp Duty, and Land Tax.
Nevertheless...
Getting an Equity Release is still a reasonable option to look at if you look to buy another home as well. The funds provided by the lifetime mortgage can be a cost-effective means of topping up if your funds fall short.
#3. Selling Some Assets
Most people usually regard their homes as their most valuable asset.
It's true, however...
Perhaps you have some other assets in your title that you may willingly get rid of, or even leverage to get an equity release for access to the extra funds you require.
Respect that this option is not a suggestion enticing you to sell-out on priceless family heritages. Although you may possess other assets, you wouldn't miss if you got rid.
#4. Your Family and Friends
Whereas most people will barely think of asking their family or friends for financial help; you must also exploit the probability of receiving monetary support from them. They may be glad to render help; more when they are the primary beneficiaries of your estate.
#5. Get a Grant
Perhaps you'd like to make renovations because of health-related issues. Sometimes the local authorities will give you some financial help.
You must look into this...
There are some Home Improvement Agencies and local council policies that assist with the fees related to urgent home modifications.
#6. Your State Benefits:
Before signing up for an equity release, it would help you best if you look at all the entitlements and eligibility you have concerning state benefits. They are an excellent source of finances to increase your income.
#7. Rent Out a Room
Sometimes you may solve your financial challenges by renting out a room in your house. It's also a lucrative way to gain some extra income.
You're still able to get an equity release regardless of you having tenants.
This option helps lower excessive borrowing significantly and will provide you with a cash lump-sum at once with extra income regularly.
#8. Work Within Your Budget
A significant consideration to make is merely adjusting your budget to propel successful financial goals.
Think about it:
The ability to raise your income might be useful with extra monthly financial inflows; however, reducing your expenditure has a massive impact on maintaining your financial security. This method may include letting go of luxury expenses and unnecessary spending.
#9. Employment
Have you reconsidered going back to work? This option is an excellent method of getting more disposable funds each month.
In my own experience:
If you are yet to retire, you may apply for a higher paying job elsewhere, or review earning more with your current employer. If you are not in employment: perhaps you might get a part-time job.
#10. Take No Action!
You might discover that your most vital considerations spawn from the consequences of not taking any financial action like an equity release at all and contemplating the most viable utility.
Your estate will benefit in the long-run.
What's Important about Equity Release Alternatives?
Not everybody who takes out an equity release will find the plans suitable for them.
In case you are one of them,
You must be able to ponder all your credible alternatives. If you find some viable alternatives, review them vigorously; they may enable you to access all the finances you need.
To add to that...
You should also research and understand how much money an equity release will provide you. It would be best if you use an online equity release calculator to figure out the maximum amount that you can release.
Renting out a Room
Is there a lot of unused space in your home?
It would help if you questioned yourself deeply as you contemplate renting out a room to generate more income. It would be best for you to address these questions with precaution because you'll have particular responsibilities to take on.
Consider this:
To profit, you must be up to speed with what to expect before letting a stranger into your home. The quality of accommodation your tenant receives will influence the tenancy they have. Primarily: concerns about their rights and how to end the occupancy.
Downsizing
Perhaps all your children have moved out, and it leaves you with much more space than you need; downsizing may be a reasonable choice.
It's a lucrative method of freeing up extra finances.
Your home might also feel too huge, or perhaps it's an ancient property that requires too much maintenance, which makes it becomes very costly for you to keep.
Then move elsewhere...
Even though shifting homes might work fine for some people, very few homeowners can fund themselves through downsizing after retirement. You must need to take into consideration the costs and emotional drawbacks that emerge from downsizing.
Budgeting
Retirement often makes make it challenging to live within your means. It would be best if you evaluated how your funds are flowing and scout for any expenses you're able to cut on to save some money. Review your bills.
Use other assets
Some people keep various assets as future investments. If you have invested in other assets, you may use the funds to cushion your income flow through your retirement. A method that maintains a very low-cost, and that's quick to arrange and implement. It will put less strain on how stiff your financial budget will have to be.
Also do this:
Check if you have any outstanding pension arrangements.
Under the pension freedom regulations, you're now eligible to gain access to pension funds from the age of 55, and this will help you address any financial challenges that may arise.