If you need a lump sum of money in retirement, perhaps to pay for a home renovation, holiday or emergency, then you may decide to release some equity in your house. This sort of lump sum release is something that more and more people are doing so that they can be better off in their retirement.
Many retired people are struggling. Many have not tucked away a big enough nest egg or a pension that pays out enough because prices are much higher than anyone predicted. It can be a shock when someone goes from earning an income to suddenly having to manage on their pension. If they have no savings, then they may start to struggle. With interest rates being low, even with savings, they do not see much return on them and so may not have enough to live off.
If they own their own home, then they might wish that they could get some of the equity out of their house. They are able to do this using a selection of equity release schemes, some of which will give a regular income and others which will give a lump sum.
There are advantages and disadvantages to releasing some equity in your home. It is worth considering the options very carefully. The main problem with it, is that it is a very final. Once you have done it, it is unlikely that you can reverse your decision and it might be something that you regret. However, you do not need to hand over all of your house but just release a bit of money from it. Then you will still have a big chunk if you need some more money or to leave for your children to inherit.
A lump sum could be a godsend. It could help with all sorts of things and you will find that you can feel more relaxed if you have a bit more money. In fact even knowing, in the back of your head, that you can release some equity in your home if you need to do so. It can be difficult knowing that you are living in a place which has so much money tied up in it that you cannot access, especially if you are struggling financially. With equity release being something that has only recently started to be overseen by the FSA, then it is a fairly safe thing to try.
