Equity Release Downsizing
Published / Last Updated on 17/05/2021
Advice on Equity Release or 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 the equity.
- Consider alternative financial borrowing or are their grants available if you are planning home improvements.
- Consider borrowing from your family or even selling to family member.
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 could be 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 to 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, 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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