Is your lockdown ambition to retire early?
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Equity release could help many people who have resolved to retire early once the lockdown finishes, says finance expert Peter Sharkey.
Anecdotal it might be, but there’s plenty of evidence to suggest that lockdown has given a large number of people a rare opportunity to consider what they’ll do with their lives when we ultimately return to normality.
In some respects, the past few months have resembled an extended version of our annual Christmas holiday, a time when many of us concoct fresh resolutions for the forthcoming year. Unlike the festive break, however, which lasts a fortnight at most, lockdown is already six times longer; accordingly, many people have used much of their unexpected free time to fine-tune ambitions and strengthen their resolve to turn over a new leaf or pursue a radically different way of life.
Unfortunately, like new year’s resolutions, the majority of aspirations formed during lockdown will come to nought, usually due to faltering enthusiasm. After all, there’s an enormous difference between wanting to change your life or career and then doing what’s necessary to effect such a change.
Money, or the lack of it, undoubtedly plays a role too.
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Yet for some, there’s a silver lining to lockdown’s extended duration, namely the time it’s given them to explore every conceivable way of achieving their longer-term objectives. This productive use of comparatively free time is most evident among the 55-plus age group, the demographic prepared to counter obstacles with predictably stoic responses along the lines of: ‘yes, but what if...?’
This explains why several recent newspaper and online bulletins report a noticeable surge in enquiries regarding equity release.
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This increased demand for information could reflect a middle-aged realisation that an injection of money is required to attain their lockdown-developed goals. Moreover, there’s a greater understanding among older homeowners that releasing a proportion of the wealth from their property as a tax-free lump sum is more straight forward than ever. Alert to the almost infinite possibilities with which this presents them, thousands of people appear
intent on realising aspirations that have gradually crystallised during lockdown, appreciating that instead of keeping cash tied up in bricks and mortar, equity release could turn them into reality.
Traditionally, equity release has been used to pay off an existing mortgage or clear credit card and other debt. Making home and garden improvements remains the most popular reason why people draw upon the wealth that has built up in their home, although many folks gift money to family and loved ones, upgrade their car, or head off on the holiday of a lifetime.
Doubtless, those who have given the matter serious thought during lockdown intend using a proportion of the funds they release to do something similar, but there’s also evidence that given such a protracted gestation period, aspirations have become even broader in scope.
Over the past few weeks, the folks at Moneymapp.com, this column’s commercial sponsors, have been inundated with equity release-related queries as I discovered last week after inviting readers to drop me a line via the firm’s email platform. A significant number of people who emailed me were interested to know how equity release could help them achieve a dramatic change of career, often to undertake voluntary work, or how the process of releasing wealth from their bricks and mortar could sufficiently strengthen their finances which would enable them to enjoy early retirement.
In almost every case, it was apparent that equity release could plug an obvious financial gap likely to appear once the yearning to do something different was satisfied.
Fortunately, the equity release process has become much more flexible in recent years. Where once homeowners were limited to taking a single, tax-free lump sum, they can now release money gradually by using a ‘drawdown’ option, taking tax-free cash from their homes in stages rather than all at once. There are many more features of equity release which suggest it will continue to increase in popularity, not least because the tax-free funds released can be used for any purpose.
This latter characteristic is likely to provide people with the confidence to implement the lifestyle changes they’ve discussed during these long lockdown months. Whether it’s taking early retirement or realising a long-standing ambition to join Voluntary Service Overseas, the enhanced options with which equity release could present older homeowners are broader than ever.
Once again, I’d be interested in hearing any concerns or questions readers may have regarding equity release, but please note, I cannot advise individuals on the suitability of equity release. Please drop me a line; my temporary email address is firstname.lastname@example.org.
Read more about equity release: www.moneymapp.com/equity-release
Drop Peter Sharkey a line!
Such has been the response to our recent ‘Equity release: your questions’ feature that we have had to expand it.
You can email Peter Sharkey (and his team of equity release experts) to ask any equity release-related questions. Contact Peter by emailing: email@example.com
As many readers have already discovered, there’s a wealth of information to be discovered at: https://www.moneymapp.com/equity-release . In addition, there are hundreds of blogs and articles dealing with the subject on the Moneymapp website, including Peter Sharkey’s weekly blog, rated one of the UK’s very best. Read more at: https://www.moneymapp.com/blog
You may still email any queries or questions regarding equity release to: firstname.lastname@example.org
Finally, please note that neither Moneymapp.com or Peter Sharkey can advise readers on whether equity release is suitable for them. However, both Moneymapp.com and Peter can introduce readers to professional advisers who will explain the process and its implications for your estate and entitlement to means-tested state benefits.
For more financial advice, check out Peter Sharkey’s regular column, The Week In Numbers.