The start of a new year is the perfect time to take a look at your finances and look towards a more comfortable financial future.
After the past 12 months of living with a global pandemic, financial anxiety has been higher than most for many families. So, if you’ve resolved to make 2021 the year you find financial peace of mind, it’s wise to take a look at all your goals and options for achieving them.
Paying off an existing mortgage
Repaying an existing mortgage can take a large chunk out of your monthly income. In retirement, on a fixed income, it can often be even more stressful. Finding the right balance between keeping repayments up alongside maintaining your standard of living in retirement can be a struggle.
For older homeowners approaching or in retirement, it can make sense to take a look at your options to help alleviate the financial strain. These could include re-mortgaging, downsizing or freeing up some of the equity in your home.
The first step is to ensure you get good advice.
Helping a loved one financially
As many young people in the past year saw their income fall or lost their jobs as a result of the coronavirus pandemic, for parents and grandparents it became even more important to help through using savings or property wealth to help.
In fact, Key’s latest report showed a quarter of equity release funds were used to support family and friends*.
Find out how else equity release customers are spending their tax-free cash in the Market Monitor
Paying off existing unsecured debt
According to The Money Charity, UK household debt grew to £1,650bn in 2019, while the Bank of England figures showed a 47% increase in debt over the last five years for those aged over 55**.
Existing debt in retirement, alongside the rising cost of living, could seriously impact the retirement lifestyle you want to have. If you’re in a position to pay off the debt, it could alleviate a lot of the financial strain, however, if you can’t there are other options.
If you are a homeowner aged 55 or over with a property worth over £70,000, you could potentially release some of the equity built up to repay existing debt. However, it is crucial and a Financial
Conduct Authority (FCA) regulatory requirement to obtain advice before doing so.
If you are struggling to make ends meet due to your existing debt, debt advice charities such as Citizens Advice Bureau or Step Change are there to help.
Find out how much you could release from your home
Boosting retirement income
We’re living longer than any generation before, meaning pensions have to stretch even further than before. How much money you need in later life depends on the lifestyle you want. Retirement gives you the time to do the things you always wanted, but it’s possible you may need to plug the shortfall financially in order to do them.
The good news is it’s never too late to take control when it comes to your money and find out how to boost your retirement income. One popular way to help boost your retirement income is by releasing some of the equity from your home with a lifetime mortgage, turning it into tax-free cash to spend on a range of needs and wants.
When it comes to financial decisions, seeking honest, expert advice is crucial. At Key, we offer equity release advice that is unique to you and your circumstances and is delivered by qualified equity release expert advisers. We’ll ensure you consider other funding options such as downsizing or alternative forms of borrowing. And, if equity release isn’t right for you, we’ll tell you.
Download our free guide
So if you think some tax-free cash could help clear existing debts or help boost your retirement finances, download our free equity release guide to find out more.
The free guide to equity release
Things to consider:
You could release from £10,000 up to 56% of your property’s value tax-free
With a lifetime mortgage, the most popular form of equity release, you remain the owner of your home
All of Key's equity release advice relates to their range of Key-branded products and is completely free-of charge, so you can find out if it’s right for you without it costing you a penny.
Key Equity Release offer lifetime mortgages only, which is a loan secured against your home.
With a lifetime mortgage there are typically no monthly repayments as the loan plus roll up interest is repaid when the plan comes to an end
You should always think carefully before securing a loan against your home.
Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
*Market Monitor, Q3, 2020