Interest rises in equity release to ‘gift’ money to kids
There has been a recent surge of homeowners looking to release equity from their property to help their family whose finances have been hit by lockdown, said SunLife.
The equity release provider said it has received more enquires from older homeowners looking to unlock their property wealth to offer support to loved ones struggling with financial pressures during the Coronavirus crisis.
The main reasons people usually opt for equity release are to enhance their own lifestyle, with home improvements, repaying debts or boosting retirement income popular, as well as gifting to family to use as deposit on a property.
But there has been a clear shift in recent weeks towards gifting to support family members, according to SunLife’s equity release director, Simon Stanney.
“With so many people suffering financially it’s understandable that older homeowners – who have built up equity in their homes and are in a position to help – will be looking to support family in any way they can,” he said.
Unlocking property wealth
The average house price in the UK has risen from £58,250 in March 1990, to £84,620 in March 2000 to £231,855 in March 2020, so those homeowners who have had their homes for 20 or 30 years will have seen them rise in value significantly. SunLife said that equity release lets them access that cash without having to move or downsize.
The money is tax free and they can use it however they like, which means they can gift it to family if that is what they want to do.
Stanney added: “In many cases, the family home would be inherited by the children anyway; equity release allows the gifting of that money when needed.”
Anyone considering equity release should get professional independent financial and legal advice before making any decisions, as it is not suitable for all homeowners.