Let’s look at some alternatives to releasing equity:
Have You Thought About Selling 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. 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 to release some money from.
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 contact specialists to help you sell.
That being said…
Don’t sell valuable family heirlooms if you don’t have to. There are alternatives to equity release.
Have You Considered Remortgaging?
We understand that people don’t normally have a conversation about what their options are around remortgaging. Have you ever considered extending your mortgage?
Let me tell you something:
Most people have an existing mortgage, but very few people have enquired from their provider about remortgaging. So, instead of going to a financial advisor for help, why don’t you ask your provider if you can remortgage or make use of a redraw facility? You’ll be amazed at how willing they’ll be to help and how much money you could save or access.
But wait, there’s more!
Another alternative to equity release is an RIO or a Retirement Interest Only Mortgage plan. These plans don’t have fixed terms. They run for life. An RIO plan requires only that you pay capital interest monthly. As with equity release, your loan will be paid off by your estate once you move into long-term care, move out of your home or pass away.
Could You Lean On The Shoulders Of A Loved One?
Is asking for help from your close family members an option for you? They might be able to help you out. I know what you’re thinking: It’s difficult to ask your family or friends for help but, why not give it a go? They might just surprise you! Even more so when there’s a chance that their inheritance will be affected. In other words, if they help you out and you don’t need to take out an equity release plan, they’ll inherit a great deal more in years to come.
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 and help you meet your needs.
Have You Looked Into Getting A Grant And How That Could Work?
If you’re making changes to your home due to health and medical reasons, the local authority could give you some extra cash. As an alternative to equity release, it’s a great option!
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 realized 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 website1.
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.
Maybe It’s Time For A Change Of Scene?
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.
What we have found:
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.
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 extremely popular. In fact, 4 million people nearing 55 are planning on moving into a smaller property when they retire. I mean, it just makes sense, doesn’t it?
When Does Downsizing Work?
- When your property starts feeling too big
- When it starts needing constant maintenance, and it costs you too much money
- If the house is costing you too much to run
- If you want to immigrate
- If you want to move closer to your family or friends
While moving house is excellent for some homeowners, few can afford to retire by downsizing alone. All the extra costs and emotions that factor into moving house when downsizing can be overwhelming.
Other Costs You Should Think About:
- Estate agent commission due upon the sale and transfer of your home
- Stamp duty
- Legal charges when transferring ownership
- Moving your furniture
- Revamping your new home to your liking
- Buying new furniture which will fit into your new home more comfortably
- The emotional toll of leaving behind precious family memories
Even though multiple people are taking out equity release plans for some extra vacation or home-renovation cash – it’s not 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 options and assess what’ll be best for your future and the future of your family.
Are You Entitled To State Benefits?
Are you aware of all the state benefits that you might be entitled to? It’s definitely worthwhile to look into these benefits, 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 inheritance.
What About Renting Out A Room In Your Home?
Have you thought about renting out a room in your house to someone? This could give your monthly income the little boost it needs! You might even like having company.
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 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.
Maybe It’s Time To Relook The Budget?
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 improve 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 save a lot by revising these carefully.
- Gas & electricity subscriptions
- TV subscriptions
- Cell phone contracts
- Home & car insurance plans
Also, look at your debit orders and decide if you still need 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.
What If Now The Right Time For A Job Change?
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.
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. This might also be good for you to meet new people and help you stay healthy and active.
Here’s a Crazy Idea: What If You Do Nothing?
What are the consequences of not taking action to improve your finances? You need to think about that.
Some people don’t have the motivation 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.
It goes without saying…
Don’t feel pressured into doing anything that you don’t want to do. Consider all your options and act with certainty and purpose.
Are There Positives For Pensioners?
You may have private pensions 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 additional income every month.
Is Selling Assets As Safe An Alternative to Equity Release?
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.
What's The Catch With Equity Release Alternatives?
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.
How Can I Get The Equity Out Of My Home Without Selling It?
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.
Can I Use Other Ways To Get Extra Money?
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.
We understand that equity release may be something people are hesitant about. Therefore, we wanted to help with that decision and present to you 11 alternatives options, or a mixture of one or more that are available to you. These options should provide you with a route or a financial plan that will assist you in your current situation.
Best of all…
Not only do you have an abundance of options but there’s an online calculator that can show you how much money you’ll get with an equity release plan. 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 decide which option suits you best.