Is Equity Release a solution for the Equity Rich?

In recent years and is a product that can both meet the needs of the wealthy, as well as those with less. In the past, equity release may have been viewed as the last port of call for funds, if all other areas had drawn a blank.

Today, that is largely not the case, as most look to release equity in their property in a proactive way. Possibly none more so than those that have sizeable equity value within their property, along with other decent sources of income.

Do you own a high value property?
If you own a £1m property, for example, and wanted to raise £100,000, let’s look at what this could mean. If you did not make any monthly payments, then at the current average fixed rate, the amount owed after 18 years would be about £200,000.
However, if property prices rose over this period at a conservative rate of just 2.5% a year, then after 18 years the £1m property could be worth around £1.55m – leaving £1.35m of available equity.

This is a simplistic calculation, and other factors will of course come into play (such as inflation), but it gives you a feel for the benefits that could accrue if you do not borrow a large percentage and own a high value property.
We’ll look at inheritance tax and managing tax liabilities in the next edition. Whilst we can assist with securing an equity release plan to raise funds, you should alsoseek professional tax advice.

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