How equity release can help ease financial pressures of the coronavirus pandemic

23 March 2020

The breadth and depth of the coronavirus economic emergency 

The raft of economic lifelines being issued on a daily basis by the government are a sign of the breadth and depth of the impact of the coronavirus pandemic and the health measures designed to postpone and stagger the peak of the disease. From a three-month mortgage payment holiday for struggling homeowners to business interruption loans’, the range of policies – and the continual calls for the government to go further – reflect the fallout of COVID-19 on businesses and workers across all sectors. 

The government measures – combined with the extraordinary community generosity that many, from neighbours to big businesses, are showing – will hopefully be sufficient to see many through what the Chancellor has acknowledged is an economic emergency’. But for some it is likely that they will still be wondering how they can make ends meet. 

Equity release to provide a short-term financial cushion 

If you are an older homeowner, you may hold the solution to helping your loved ones through what is, hopefully, a finite crisis. Unlocking some of the equity in your home could provide the necessary financial cushion to see them through to when some semblance of normality returns. 

Some equity release products provide the ability to make interest payments when you are able to do so, to reduce the amount of the loan. Although you and your loved ones may not be able to service the interest payments in the current economic crisis, it may be something that either you or they are able to do when the economy picks up again. Our expert equity release advisers would be happy to talk you through both your current situation and your projected normal’ finances to discuss how you might manage this to keep your total loan as low as possible, if that is one of your aims. 

Situations in which equity release can help No 1: Reduced income due to school closures 

Although the government list of critical-sector workers whose children should still have access to childcare goes far beyond the emergency services, there will still be many parents of young children who will no longer be able to work, or who will have to work reduced hours, because the schools have been shut indefinitely. 

If your son or daughter is suffering reduced income because they have to stay home to look after their children, releasing equity from your home could provide them with sufficient money to cover the shortfall over the coming months. 

Situations in which equity release can help No 2: Propping up a business 

The government has released a range of measures designed to help keep business afloat, but the many stories of business that have already folded and staff already laid off show that these measures are not necessarily being delivered in time. It’s also important to realise that the measures are bridges not bailouts – the loans and grants will have to be repaid, potentially meaning increased costs when businesses are trying to rebuild. 

If you or your children have a business that needs a cash injection to see it through to the opportunities that will arise when the economy begins to pick up, equity release could be the solution. Again, you will need to discuss the costs of setting up the loan as well as your options for paying the interest and possibly repaying the loan altogether to weigh up the merits against a government loan or grant. But, depending upon your personal circumstances, equity release could be an attractive solution. 

Situations in which equity release can help No 3: To pay for care at home 

The coronavirus pandemic is creating a cocktail of social pressures that is likely to increase the need for care to help people stay or return to their own homes. The pressure on the NHS means health workers are going to be more keen than ever to minimise bed blocking and get those not in need of round-the-clock medical care home as soon as possible, while people who might previously have been admitted to hospital will be told to stay at home. The government’s COVID-19 Hospital Discharge Service Requirements introduced on 19 March stipulates that hospital beds must be vacated within one hour of a decision that someone is medically fit to leave hospital. 

Alongside this pressure is the risk of increased isolation among the over 70s and other at-risk groups who have been told to self-isolate, especially for those who don’t have family close by. 

If you or your mum or dad need care either to help you stay in your own home or to support you on your discharge from hospital – or to make sure you have someone popping in regularly to check you are OK while you are unable to get out and run errands yourself – equity release could be an appropriate financial solution to enable you have the support you need during this challenging time. 

Expert advice to help you devise an appropriate coronavirus solution 

The coronavirus pandemic is creating unforeseen financial and emotional strains in all kinds of ways. Equity release won’t be the right solution in all cases, but in some circumstances, it could ease money pressures and the mental strain this produces,” commented Jan Johnson, founder of 55Plus Equity Release. 

Our expert equity release advisers will be happy to guide you through the pros and cons to help you decide whether it could be a solution for how COVID-19 is impacting on you and your loved ones.” 

While social distancing remains advisable, we can arrange remote meetings, via phone or video calls, to discuss equity release and whether it is an appropriate solution for you. 

During the current coronavirus outbreak, we are conducting these over the phone or by video call.

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