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Equity Release – why pay more than you should

If you are considering releasing equity from your property in the near future, delaying the decision runs the risk of paying more than you should.

That is because coronavirus-related changes to the ever-evolving financial market and economy have created a 'strike while the iron is hot' moment in time. that won’t be around forever.

Whether you are looking to unlock tax-free cash from the value of your home to make improvements to your property, to help out family members, or to give yourself more financial freedom, the best time to release equity from your home

There is no denying that we are living in uncertain times. On the one hand, there are fears of an upcoming recession, which could result in less favourable rates for borrowers.

At the same time, following a three-month period of consecutive monthly falls, Rightmove is reporting that the average price of UK property coming to market climbed in both January and February 2021.1

Further encouraging signs such as interest rates being at an all-time low and lenders being open to lending (at the time of writing) indicate that the timing is right to release money.

If you are concerned that, post-lockdown, your finances - or those of your family - might be affected, acting now to release funds could help you stay one step ahead of an uncertain future and give you the stability to ride out any potential periods of unemployment or furlough.

Proceeding with equity release now will also ensure you benefit from the current value of your home, which could potentially drop if we were to enter a recession and house prices dip. In sustained periods of economic uncertainty, the financial markets weaken and lenders are less likely to lend. Currently, we don't have those restrictions.

Now may also be the best time to apply for equity release from a time and ease perspective. The value of unmortgaged owner-occupied homes has risen 67% over the last ten years, according to Savills Estate Agents.2 Many of those owners may be holding off applying to unlock funds due to doubts about their financial futures, therefore the demand is less.

Current social distancing guidelines mean that physical property valuations are on hold, which means processing applications is slightly quicker. Once the green roots of recovery start to blossom, the demand may increase and physical valuations will resume, which could lead to application delays.

A combination of historically competitive equity release rates, the prospect of house prices plunging, and the fact that some products (such as lifetime mortgages) are giving borrowers the option to repay a percentage each year, is leading to demand in the industry.

Ultimately, of course, only you will know if and when the time is right to release money from your home. We are here to support you throughout the decision process of balancing long-term decisions with immediate needs. If you would like to discuss your options in more detail, we would love to chat.

With over 20 years' experience of equity release lending, we know the financial market inside out and will be transparent about the risks and benefits of the options available to you. Our independent and ethical advice will be based on your particular circumstances and needs. We can be trusted to find the best available solution for you.

In a time of social distancing, you can contact us by phone for a remote consultation. Call us today on 01473 603 211.


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