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Asset Rich But Cash Poor?

How to use your property to boost your income

Baby-boomers are often said to be better off than younger generations, but many are struggling to generate enough income in their later years.
The over-55s are increasingly referred to as the “sandwich generation”, as they fund their children’s education or first step on the property ladder, often alongside paying for their parents’ long-term care.Many are delaying retirement, with around half of those due to stop working this year considering working past the state pension age in order to increase their retirement income, according to research by Prudential. Despite this squeeze, many around retirement age are often cash poor but asset rich. Total property wealth owned by over-65s who have paid off their mortgages stands at a record high of more than £1 trillion, growing £37 billion in the past year. So, whether you have paid off your mortgage or not, how can you use your property wealth to boost your income?Cash in on your propertyThere are a number of ways you can use your home to boost your income, including paying off an unpaid mortgage to reduce your monthly expenditure. Your retirement income will, in most cases, be far less than what you are paid when working, so any unpaid borrowing can become relatively more expensive when you retire. A simple way to get rid of your mortgage would be to sell your house, pay back what you owe to the bank, and buy a new house with what is left over. However, the high stamp duty costs involved can be a deterrent for those at the upper end of the property ladder. If you want to pay off your mortgage but stay in the same place, you can do so by switching to a lifetime mortgage, borrowing money against your home, eliminating the need to make regular repayments.You can pay off your mortgage using equity release, paying back the provider with interest after you die or sell your home. This will likely reduce the amount of inheritance your family will receive but will also allow you to live mortgage free earlier.

Investing for income

Buying a house can be a great investment, often increasing significantly in value over time, as seen in certain parts of the country, shielded from the ups and downs of the stocks and bond markets.

However, having a large proportion of your net worth tied up in the family home is not particularly useful for those looking to invest for income.

You can release equity from your home, and divide your wealth between a property and a range of possible income-generating investments, each with their own risks and returns.



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