Transcript

If you own your own home, there can be a lot of money tied up in it. So releasing cash from your home is a way to boost income in retirement. One way of doing this is to downsize – moving to a smaller, less expensive house. Moving isn't cheap, and of course, there's the upheaval to consider. But that could be useful money left over, which you'll be free to spend as you need.

Another option is to release funds from your home while still living in it by securing a loan against the property. And there are several kinds of loans to choose from. A lifetime mortgage is a type of equity release. It has the flexibility of allowing you to borrow against some of the value of the home, either as a lump sum or several smaller amounts. The loan is repaid by the house being sold when the borrower dies or moves into long term care. The interest rate is usually fixed, but as it gets added to the loan amount, it does mean that the amount owed builds up quite quickly.

There are loan options where you can pay some or all of that monthly interest instead of it being added to the loan, and this reduces the overall cost. This type of borrowing needs careful consideration and financial advice. Just like a standard mortgage, it's secured against the home and will reduce the value of the estate.

There may be cheaper ways to borrow money, but a specialist advisor will look at all your options and recommend if this is the best solution or not. With retirement interest-only mortgages, making sure that the interest payments are affordable is important, because the home may be repossessed if payments aren't kept up.

Lifetime mortgages and retirement interest-only mortgages are available to people who are aged 55 years or older and are UK homeowners. Minimum property values apply, but these vary. They're not right for everyone, so you will have to take advice if you think these products may be suitable for you.