The Insights and Advantages of Responsibly-Managed Equity Release
There is nothing more tragic than reaching your golden year and finding yourself stuck with a brass ring from a financial standpoint. The great French novelist Balzac’s masterpiece Le PèreGoriot is the story of an old man who—despite having worked hard all his life—is taken advantage of by family, makes poor financial decisions later in life, and is thus brought to ruin. Balzac’s story has long been compared to a British masterwork of this kind—Shakespeare’s own King Lear.
You’ve worked hard for your future. You know that saving for the future is important, and you have long heard the virtues of saving for your retirement. If you are over 55 and looking for economic assistance in this regard, companies such as Responsible Equity Release can give your financial portfolio a head start and help you achieve that happy ending you deserve.
What Is Equity Release?
Broadly speaking, there are two different types of financial assets—fixed and liquid. The latter are things like money, which is easily transferrable from or usable in one situation or another, and thus “fluid.” The former are things which have intrinsic value—think cars and homes especially—and are not easily transferrable, and thus “fixed.”
Equity release, in broad terms, allows you to use the fixed capital value of your home to garner income. This is accomplished by releasing some of the value of these homes, thus transforming part of the value of that “fixed” asset into more easily spendable “liquid” capital for loans which can be repaid later at various rates.
It is important to note that when it comes to equity release, responsible financial moves are key. There are many different equity release plans out there, and some have distinct advantages over others in terms of their short- and long-term benefits and risks. Equity release can be helpful, especially for those over 55 with a certain financial portfolio. Releasing this capital can provide you with immediate liquid assets necessary to pay bills, clear debts, help your family, or provide a little extra capital with which to go on holiday.
Regulation and Security
In the United Kingdom, the market for equity release is fully regulated and subject to the Financial Conduct Authority. It is important to note that, in the UK, this may impact the means-tested benefits to which you are entitled. That said, this comes from releasing some of that capital from your home and can afford you many potential advantages, as explained below.
Advantages of Equity Release
Perhaps the biggest and most recognisable advantage of responsibly releasing equity from your home within the confines of a proper plan is that you will receive either a lump-sum payment or continual income over time. This can be especially helpful to supplement income already saved or stored away for the purpose of retirement. What’s more, this payment can be index-linked. Crucially, you are protected from downturns in the housing market under the No Negative Equity Guarantee (NNEG) so as to protect your future payments from fluctuations in the market. This can reduce the amount of inheritance tax you need to pay for your estate. These protections and regulations in recent decades have been critical in establishing the security of responsibly-managed equity release.
Don’t let your retirement story be one of tragedy—reach for that happy ending with a responsibly-attended and carefully considered equity release program.