11 Equity Release Alternatives
That being said, let’s look at your other options:
1. You Can Sell Your Assets
If you have other assets, you could always sell some of them or all of them, depending on how much money you need. Maybe you could also release some funds from your assets? Either way, it’s an excellent alternative to equity release on your home. Some assets might even be able to raise some extra money for you, so you should look into that.
For the most part, a person’s home is their biggest asset. But it doesn’t have to be the only one you can choose from to release some money.
You might also have some possessions and personal belongings you no longer use or need. Have you considered selling them? Well, you can! These can be small things in your home that you can quickly sell or more significant items to market online or specialists.
That being said…
Don’t sell valuable family heirlooms if you don’t have to. There are also other alternatives to equity.
Have you ever thought about remortgaging? Or have you ever considered extending your mortgage with your lender?
Let me tell you something:
More often than not, people have an existing/current mortgage. However, very few people have enquired from their provider about their options regarding their mortgage. So, instead of going to a financial advisor for help, why don’t you ask your provider for more information about your mortgage. You’ll be amazed at how much they’ll help and how much money you can save.
The other option as an alternative to equity release is an RIO or a Retirement Interest Only Mortgage plan. These plans don’t have fixed terms. They run throughout your whole life. An RIO plan only requires you to pay your owed capital interest monthly, that’s all. As with equity release, your loan will be paid off by your property or estate at the end of your plan.
3. You Can Lean On Family Or Friends
Is asking help from your close family members an option for you? They might have some potential to help you out. I know what you’re thinking: It’s difficult to ask your family or friends. They might love to help you! Even more so when their inheritance is affected. In other words, if they help you out and you don’t need to take out an equity release plan, their estate will be more in the future.
Best of all:
You don’t have to loan money from them permanently, but if they can lend you money interest-free, it might put you in a better financial position for the future.
4. Get A Grant
If you’re making changes to the home due to health reasons, the local authority could give you some extra cash. As an alternative to equity release, it’s great!
Have you ever looked into grants before?
Well, sometimes it’s free to make small changes to your home. For example, the local council might agree to changes that cost less than £1,000. These changes include things like:
- Grab rails along a ramp/in the shower
- A cement ramp or extra steps
- Motion-censor lights for security at your door/in your yard
- Sometimes, they might even cover costs for a wet room or if you want to widen doors
You might not have realised this, but some charities help people funds things like that and offer grants. Independence at home is one of them. You can have a look at their website here1.
A Home Improvement Agency (HIA) can find schemes to help you out with the costs of home changes. If you want a local HIA, go to this website2.
5. You Can Move To A New Home
How about moving to a cheaper/more affordable home?
It’s an excellent option to ‘downsize’ in a manner of speaking. It’s usually the first thing people think about, rather than equity release.
Let me tell you something:
Downsizing is a good option, but it isn’t for everyone. It involves other costs that you need to consider, such as estate agents costs, moving charges and Stamp Duty Land Tax.
If the new property you move to isn’t worth as much, you might lose some property growth benefit. So it seems that equity release is still in the running as one of your options, even when buying a new house. It could be in your favour to get a little boost from a lifetime mortgage because it’s very cost-effective.
Say your children have moved out and went to college, leaving you and your partner with all these extra rooms. Downsizing is then totally possible without putting your family under stress. Downsizing in this example will also help decrease your household chores volume if you think about it. It’s a win-win!
And listen to this…
Downsizing had become so popular that 4 million people nearing 55 are planning on moving into a smaller property when they retire3. I mean, it just makes sense, doesn’t it?
When Can Downsizing Work?
- When your property starts feeling too big
- When it needs too much maintenance as an older property, and it costs you too much money
- If the house is costing you too much to run
- If you want to migrate or immigrate
- If you want to move closer to your family or friends
While moving house is excellent for some homeowners, few could afford to retire only by downsizing. All the extra costs and emotions that factor into moving house when down-sizing can be too much.
Other Costs You Should Think About:
- Estate agent charges when looking for a new home and selling your old one
- Legal charges when transferring ownership
- Moving your furniture
- Revamping your new home to your liking
- Buying new furniture which fit into your new home more comfortably
- Stamp duty charges
- The emotional toll of leaving good family memories behind in that home
Even though multiple people are taking out equity release plans for some extra vacation or home-renovation cash – it’s not something for everyone.
But let me tell you something:
However nice it might be to have financial freedom, it’s vital to weigh up all your option and assess what’ll be best for your future and the future of your family.
6. Claim State Benefits
Are you aware of all the state benefits that you might be entitled to? It could be worthwhile to look into them if there are benefits for you, which can increase your income on an ongoing basis.
Best of all:
It could be that the state owes you money that will increase the estate of your beneficiaries – you never know! These benefits are an excellent way to get some extra cash, as it doesn’t affect your inheritance.
7. You Can Rent Out Part Of Your House
Have you thought about renting out a room in your house to someone? This could you’re your monthly income the little boost it needs! You might even like having company. They could even be a chef and cook for you every day.
And good news!
If you’re renting out a room, it’s still possible and legal to take out an equity release plan on your property. This could decrease possible borrowing, giving you a lump-sum and ongoing extra cash every month.
In the UK, the government has a Rent a Room Scheme where you can earn roughly £7,500 annually. Better yet, that extra income will be tax-free if you’re renting out a furnished room in your house.
Have you ever considered revising your budget to reach your financial target? Getting a higher income is one way, but reducing your expenses is another.
If you’re thinking about revising your finances to have more cash flow, it might be a good idea to look at your subscriptions, for example. Are you letting them continue without seeing if there are cheaper alternatives? You could be saving a lot of expenses this way
- Gas & electricity subscriptions
- TV subscriptions
- Cell phone contracts
- Home & car insurance charges
Also, look at your debit orders on your bank account and revise if you’re still needing them or not.
You won’t be getting a cash lump sum, but you can save a lot of money every month to reach your financial target.
9. Changing Your Employment
Changing jobs or starting to work again after you’ve retired is another option you can consider. It’s a way of getting more income and extra cash than you’re used to every month.
If you’re able to get another job that pays better than your current one, that’s great! You could be getting a raise at your current position, which will help your finances a lot.
If you’re already retired, don’t worry! You can always work part-time if you’re able to. This might also be good for you to meet new people and to stay healthy and active.
10. You Don’t Have To Do Anything
What are the consequences of doing nothing regarding your finances? You need to think about that.
Some people don’t want to do anything about their finances, and some people simply can’t. Doing nothing can affect your lifestyle or prevent you from renovating your home. On the other hand, if you have an interest-only mortgage hanging over your head, you might need to do something about it. Or you’ll lose your home.
Let me tell you something.
Doing nothing or doing something is still your choice. So don’t feel pressured into doing anything that you don’t want to do.
You may have private pensions4 from which you can get some extra money. This can come in handy. It’s a great way to earn extra money—either a lump sum or an additional income every month.
It’s safe in the sense that you can simply sell what you have. You won’t need to pay extra charges most of the time, and your inheritance won’t decrease as it would with equity release.
The only catch with equity release alternatives is that you’ll have to make sure about them. For example, if you’re thinking about getting a grant, there might be prerequisites or certain criteria you need to meet. Or renting out a room in your home might make way for some awkward encounters with the renter. The catch is that you’ll never know exactly how it’ll work out for you.
You can get cash from an equity release plan. There are many providers and plans to choose from. So, check out all options before you pick one. Then, you’ll be able to get the cash from your property in no time. However, have you considered renting out part of your house for that extra money instead? It’s a great and cheaper alternative.
Yes, it’s possible to sell another asset you might own, you could always downsize to a smaller home or you could take out a grant. Another way is to get a higher-paying job or claiming your state benefits.
Equity release isn’t the best option for everyone. Therefore, you need to look at all the options and alternatives that are available to you. You can use one of these 11 alternatives, or a mixture of some of them. It’s up to you.
Best of all…
There’s an online calculator that can show you how much money you’ll get with an equity release plan if that’s the option you’re considering. You’ll then be able to determine if it’s for you or not. Thankfully, it’s not your last hope.
Look at the alternatives we’ve listed and see if the shoe fits!