Using equity release to buy a new house
14 July 2021
Equity release: increasingly popular for buying a new home
The coronavirus lockdown has seen a shift in attitude for many people, notably in how we want to spend our time and money. According to an analysis of 2020 customer data by Canada Life, there’s an increase in homeowners over 55 using equity release to buy a new home, with 18% applying for this reason alone – more than double the proportion at the start of the year.
What has caused the sudden popularity in releasing equity for new property? With UK house prices rising by 5.4% over 2020, it is possible that many homeowners over 55 saw increased value in their current property, with new opportunities becoming available to help them buy their dream house.
Using equity release to buy a new home
There can be several reasons why, if you’re over 55, you might turn to equity release to buy a new home. It could be because your current home no longer suits your needs, or you have a dream house you’d like to move to but don’t quite have the budget for buying. Releasing equity could be a realistic route to achieving your desired home.
A major benefit in using equity release for new property purchase is that it can streamline your finances and the process: the sale of your current property, mortgage repayment and new home purchase are finalised at the same time. This means money available from the sale of your current property, as well as equity released from your new one, can combine and help to make the full purchase payment on your new house. Even better? This can be done without having to make any monthly payments if you want.
Using equity release for a holiday home
For some homeowners over 55, equity release can be a solution to enable them to buy a second house at home or abroad to use as a holiday retreat – or potentially to realise rental income. If you are interested in using equity release for this purpose, however, there are some points to consider first:
- Time shares: If you want to release equity to buy a time-share property, you will be required to live at your primary home for at least six months of the year
- Extra costs: Purchasing your new holiday property outright is preferable, as it will otherwise carry an additional standard mortgage
- Learn the land: If you’re intending to buy abroad, local currency exchange rates, laws and regulations may apply to your new holiday home — so do the appropriate research first!
It’s also worthwhile checking that your desired property location is currently allowed for UK travel. You can easily check this online, through the government’s Travel Guidance website.
The founder and Managing Director of 55Plus Equity Release, Jan Johnson, comments: “We’re increasingly seeing homeowners over 55 using equity release to help them move house coming out of lockdown.
“Equity release can help you buy your dream home or holiday home. But you need to talk to an experienced adviser who can guide you through the process and make sure you understand the pros and cons at each stage. At 55Plus, we specialise in equity release, and pride ourselves on always acting in our clients’ best interests.”
If you’re thinking about using equity release to buy your dream home, or for a holiday retreat, please get in touch.
Safe consultations: socially distanced, over the phone or by video call – we are happy to hold our initial free consultations however you feel safest, in line with current guidelines.