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If you need money later, is putting your house in danger really the best option? Here are five equity release alternatives to consider first.

What is equity release?

The most popular equity release product is the Lifetime Withdrawal Mortgage, which is where you take out a loan against your home.

You get a small initial lump sum followed by the possibility of receiving income in the future.

You pay interest on the money you take, which can be accrued and paid when the mortgage is paid off.

With life mortgages, you don’t make any repayments: instead, when you die or walk into a care home, your home is sold and the mortgage is paid off.

Releasing stocks may grow in popularity, but that doesn’t necessarily mean it’s the right option if you need money later in life.

The average interest rate on life mortgages is between 2.5% and 5%, and you may have to pay a range of fees such as arrangement fees, completion fees, and legal fees.

If you need to raise additional funds, here are five alternatives you might consider. If you are still interested in freeing up equity, this calculator from Saga will give you an idea of ​​how much you can expect to receive.

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1. Credit card

If you only need to borrow a relatively small amount or have a small debt to pay off, a 0% credit card could allow you to keep ownership of your home and pay no interest on your home. borrowing.

The Santander All in One credit card (representative APR of 21.7%) has an interest-free period of up to 26 months on balance transfers and new purchases, although you have to pay a monthly fee of £ 3 .

Elsewhere, the Sainsbury’s Bank Nectar Dual 21 month credit card (20.9% APR) gives you 21 months interest free on purchases and balance transfers, with a 3% fee charged on these.

If you want to compare the best credit card deals on the market today, read these:

Compare credit cards (Image: CTM)

We work with Compare the Market * where you can find out which credit cards you’re eligible for without hurting your credit score. Click here to learn more or go straight ahead and find out which credit cards you may be eligible for.

2. Personal loan

Borrow money through a personal loan and you’ll avoid all of the costs associated with freeing up equity and leave your home out of the equation.

Rates are currently at near record highs. If you want to borrow between £ 7,500 and £ 20,000, you can get as low as 2.8%.

Thus, it is possible to borrow reasonably large sums without having to risk your home.

3. Downsizing

If you don’t want to worry about dealing with credit card or personal loan repayments, another option is to downsize.

Moving to a cheaper home will allow you to realize the value of your home now.

This takes away the fear that a downturn in the housing market in the future could wipe out the money you have left in your home after the lifetime mortgage is paid off.

This option also makes it possible to avoid getting into debt and the interest costs that may result from it.

4. Rent a room

Many people hate the idea of ​​raising sticks and leaving the family home late in life, but they have empty rooms.

Another option for getting a regular income from your home is to take a tenant, assuming it’s convenient for you given the ongoing pandemic.

Under the government’s Rent a Room program, you can earn up to £ 7,500 per year tax-free by renting a furnished room in your home.

You might find that this is an invasion of your privacy, or you might welcome the business – either way, this will definitely be a regular source of income.

5. Praise your reader

Another alternative could be to hire your reader.

More and more people are looking for parking near their place of work or concert or sports halls.

Depending on where you live, you could earn anywhere from £ 100 to £ 200 per month renting your driveway through websites such as YourParkingSpace.co.uk or JustPark.com.

There are many other ways to make money from your home. To learn more, check out our guide to easy ways to make money.

If you are still interested in freeing up equity, this calculator from Saga will give you an idea of ​​how much you can expect to receive.

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