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Using equity release for house buying

Buying a new or second home to live in, or to enjoy with family for holidays, is a common desire for many homeowners over 55 in retirement and despite UK house prices falling 2.4% in the year to July, plans can feel unachievable if you do not have the finances available. This is why some homeowners look to equity release as a solution, to access the funds needed for a fresh start or a holiday hideaway.

Using equity release to buy a new home

With Forbes reporting a gradual normalisation of UK house prices that has seen average costs fall for four consecutive months, many homeowners over 55 may be thinking of rekindling their plans to buy a new or second home.

There are several reasons why you might turn to later life lending to buy a new home. It could be because your current house no longer suits your needs due to its size, or health and mobility issues have made it unsuitable to live in. Or there may be a dream house you’d like to move to — whether it’s abroad, or in a chosen retirement location — but don’t quite have the budget for buying in tough market conditions. This makes releasing equity in your current property a possible route to finding the finances you need to do so.

Why equity release can help in buying a new home

A major benefit to using equity release for a new property purchase is that it can both streamline your finances and the process, as the sale of your current property, mortgage repayment and new home purchase are all finalised at the same time. This means the money available from the sale of your current property, as well as equity released from your new one, can combine and help to make the full purchase payment on your new house – rather than being at the mercy of several market factors, which can sometimes lead to the purchase falling through.

Another benefit to using equity release to fund the purchase of a new property is its flexibility on how a successful applicant chooses to repay the interest, whether this is in monthly sums — or not at all.

Using equity release for a holiday home

For some homeowners over 55, equity release can enable them to buy a second house at home or abroad to use as a holiday retreat – or potentially to realise rental income. However, if you are interested in using equity release for this purpose there are some points to consider first:

Time shares: If you want to release equity to buy a time-share property, you will be required to live at your primary home for at least six months of the year

Extra costs: Purchasing your new holiday property outright is preferable, as it will otherwise carry an additional standard mortgage

Learn the land: If you’re intending to buy abroad, local currency exchange rates, laws and regulations may apply — so, the appropriate research will need to be done first

If you’re thinking about using equity release to buy your dream home, or for a holiday retreat, please get in touch.