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Author: Carl Shave-Director
Updated on May 28th, 2024

Uses of Equity Release

We can all imagine ways to improve our lives if we had access to a large lump sum of extra cash. By tapping into the value of your home, you can unlock funds to support a better way of living.

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What is Equity Release used for?

There is no set use for Equity Release; instead, there are many different things it can be used for.

Many people can use Equity Release funds to make a real difference to their lives, their homes and their family. Below, we run through many of the most popular uses, from the practical to the personal and the essential.

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What can Equity Release be used for?

There are a range of different things Equity Release can be used for. Below we have highlighted some of the most common uses based on our years of experience.

Can I use Equity Release for home improvements?

Yes, the tax-free cash obtained through Equity Release can allow you to improve the quality and value of your property.

If you have been living in a property for many years, even decades, it’s inevitable that time will take its toll. Your home could simply look past its best, or some aspects might even be badly in need of repair. This can be frustrating and demoralising if you only have a small income to work with.

You might want to replace carpets and curtains, get new windows or secondary glazing, or make repairs to the fences or roof. Perhaps you need a new kitchen, and the garden needs re-planting and landscaping.

Can I use Equity Release for care costs?

Yes you can! As the population ages in general, so does the need for professional care. If you need help at home for tasks like cleaning, washing, dressing and cooking, there are resources available through your local authority.

However, budgets are shrinking and the amount your council can contribute will not always meet the full costs of your care needs. This means you could be asked to cover the shortfall.

It might be only a small sum per week, but if you have a limited income the numbers soon add up. Equity Release can provide a way for you to keep a level of comfort and dignity, without having to lean on friends or family.

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Can I use Equity Release for mobility equipment?

We know that while the mind can stay young forever, in later life the body sometimes lets us down. As we get older, mobility can become an issue and you might need to look at ways to help you get around.

You might be able to get some help from your local authority, but this would only be for the bare essentials.

Luckily, you can use the tax-free funds from Equity Release to adapt entryways, install a stairlift, obtain an adjustable bed and chair or a mobility scooter. You could also adapt your car for easier use, and you won’t have to be held back by a lack of mobility again.

Can I use Equity Release to pay off my mortgage?

Equity Release is a great way to go from a mortgage that still requires regular monthly payments, to a loan that will only be paid back once your property is sold.

You might only have a few years left to pay on the mortgage, but this would free up a large portion of your monthly budget to spend on other things.

Also, Equity Release can help people who took out an interest-only mortgage and found that the investment returns are not enough to cover the whole value of the loan. The plan can be a way to cover the shortfall, keep the bank at bay and ensure their home is safe.

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Can I use Equity Release to clear debts?

Some people with expensive credit or loan agreements have been able to pay them off using funds obtained through Equity Release.

Similar to paying off a mortgage, Equity Release can mean replacing the monthly repayments demanded by a creditor with a tax-free lump sum repayable only when your house is sold. This gives you relief from ongoing debts and peace of mind, knowing you can stay in your own home for as long as you need to.

However, it’s worth talking over your situation with a financial adviser to make sure you find the most cost-effective option.

I want to help my family, can I use Equity Release?

This is one of the most common uses of Equity Release, using the tax-free lump sum to pay off the debts or mortgage of a grown-up child or grandchild.

It’s possible to provide family with the freedom to start thinking constructively about their monthly spending and improving their lives too.

You could also use Equity Release to help a younger member of the family get housing ladder. This can be done through a large cash gift for a deposit or an interest-free loan. Or perhaps they have a great business idea, but just need the funding?

In some ways, this could be seen as giving your family an inheritance when they most need it, instead of having to wait years until you pass away. In any case, you should make it clear whether the money you are using to help them is a gift or a loan.

Can I use Equity Release to buy new high-value items?

You might simply wish for better things in life. So, yes, you can use the funds from Equity Release to pay for a top-of-the-range home entertainment system, a modern car, a caravan or even a boat.

Can I use Equity Release for a holiday?

Yes, you can use Equity Release to go off and see the world in style. There might be places that you’ve always wanted to go but never had the chance.

By freeing up the money in your property, you could see the world from the deck of a cruise liner, tour ancient cities, or relax on a secluded beach.

Are there any restrictions on what I can use Equity Release funds for?

You’ll be pleased to know that there aren’t any legal restrictions on what you can use the funds for, although certain lenders may impose limits on what the funds can be used for.

Certain situations in which a lender may impose limits include:

  • If you intend to gift the funds to a family, your family will need to understand the consequences of doing so.
  • Investing your funds into stock and shares is typically not allowed by lenders. This is because the amount you make off the investment is likely to be lower than the interest on the loan.

If you’re unsure about what you want to use your funds for, why not reach out today. Our expert team can advise you on your options and ensure you get the right deal for your needs.

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