Gifting equity release to help loved ones

Equity release can provide a way for homeowners to share their hard-earned wealth with loved ones in later life, while they are still around to see them enjoy it. From help getting on to the housing ladder, to assisting with a wedding, equity release can help families to share life’s most important milestones.

A living inheritance

Traditionally people only inherited when their loved ones passed away, but with the cost of living increasing it’s becoming more common for families to choose to gift a living inheritance.

This often financially facilitates a loved one to achieve an important life goal such as owning their first car, buying their first home or going to university. The attraction of a living inheritance is that you would be around to share these magical moments with the people you care about (and help them to spend the money wisely).

‘Bank of Mum and Dad’ supports first-time buyers

If you have children or grandchildren then you’ll probably be well aware how hard it’s been for first time buyers to get on the property ladder in recent years.

The current house prices in the UK can mean even a 5% deposit can be a considerable amount of money and a 20% deposit could be beyond reach for some. So, it is unsurprising that people are turning to their elders for help.

A family affair

As well as contributing (or even completely covering) deposits to purchase homes, parents are gifting money to help their children pay off debts, fund day-to-day living, pay university fees or even opting to spend on travel with their loved ones to enjoy some quality time together.

Whatever your motivation, helping the younger generations can put a strain on many families. It often leaves parents and grandparents consequently delaying retirement, using their savings or even having to sell their homes to help their family out financially.

For those who would like to be able to help their children financially but are perhaps concerned about the pressures on their own finances, equity release could be an ideal option for all involved.

Equity release gifting

Releasing some cash to gift to family is becoming a more popular choice for many homeowners over the age of 55. It enables parents and grandparents to see their housing wealth go to good use while they’re around to benefit from seeing their loved ones enjoy a better quality of life with less financial stress.

By releasing a cash lump sum from your own property, you could effectively give your children and grandchildren their inheritance early. The money you release can be spent in any way you choose, and the loan typically isn’t repaid until the plan comes to an end, usually when you pass away or move into long-term care.

Whether you want to change somebody’s life with your gift, or simply treat them to an experience they might not otherwise have had, gifting is a great way to make your inheritance mean more. If you are thinking about taking out an equity release plan to gift, then you need to speak to an equity release specialist.

They can help you to explore your options (including the alternatives) and help you to understand the implications, such as how it may affect your entitlement to means-tested benefits, now and in the future. A lifetime mortgage, the most popular type of equity release, is a loan secured against your home.

Equity release may involve a home reversion or a lifetime mortgage, which is secured against your property. To understand the features and risks, ask for a personalised illustration.

Equity release requires paying off any existing mortgage.