Equity Release Downsizing

Published / Last Updated on 13/03/2017

Equity Release or Downsize.Equity Release Downsizing

When giving equity release advice we always have a list of priorities on whether equity release is suitable.  These are:

  • Consider selling the property and downsizing to release equity.
  • Consider alternative financial borrowing or is there are grant available if you are planning home improvements.
  • Consider borrowing from family or selling to family.

Downsizing

When looking at equity release, you should always consider selling and downsizing.

  • Do you want to stay in the home?
  • Do you have an emotional attachment to the home?
  • When you are older will you be able to look after the home and garden?
  • If a house, when you are older, will you be able to use the upper floors?

Answer all these questions when making a decision to equity release.  It just may be that downsizing is a more suitable option for you.

Already have an equity release scheme and wish to downsize?

  • Portablility:  Most equity release schemes will allow you to transfer your equity release scheme onto a new property.
  • Lower value: If the property you move to has a lower value than your current property the equity release company will usually ask for the equity release balance to be reduced in proportion. 
    • For example:  If you live in a home worth £200,000 and you have an equity release balance oustanding of £50,000. 
    • If you then downsized to a property worth £100,000, then the equity release company is likely to reduce your equity release facility in the same proportion, in this example to £25,000. 
    • Your new home is worth half the value of the existing one, so your equity release scheme may be halved.
    • This would be paid for by some of the equity you receive from selling your home when downsizing.

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