When you want to gift money or property to your children, grandchildren, family members or friends but don’t have the cash on hand, an equity release may be a good solution. Equity release is a type of loan that allows you to use the value of your home as collateral for borrowing against it.
The equity release for gifting offers a way to help your family with the costs of their care by releasing some or all the value in your property. It can be used as an alternative to selling up and moving into a smaller home, and it will also mean you have more money available for spending on yourself now that you don’t need to worry about mortgage payments.
In this post, John Harris, Equity Release Specialist at LondonInvestorShow will explore using equity release for gifting and whether it’s right for you!
Reasons for Using Equity Release to Gift
Parents, driven by the unwavering desire for the best for their children, often aim to support them in achieving significant milestones, particularly in the realm of homeownership. This prevalent motivation extends to assisting individuals in various stages, whether they are first-time buyers or seeking to upgrade their living arrangements. Engaging in Equity Release with Premier Equity Release or similar companies can emerge as a viable avenue for parents to leverage some or all of their inheritance. This strategic approach plays a crucial role in making the dream of homeownership a reality for their children.
Other motivations for parental gifting could include assisting the children in starting their own businesses. With a good business plan, equity release giving could provide kids the confidence they need to start their own business and become financially secure.
When a parent can provide an additional cash boost of support, sometimes it can mean all the difference in making life more comfortable. Sometimes when parental and financial support come along with those added confidence knowing that finances are secure then job prospects become better moving forward as well.
Equity Release Plans Designed for Gifting
Equity release gift vouchers are a great way to pass the baton of wealth and equity from one generation to another. This is an excellent solution for those who want their children or grandchildren to enjoy the benefits of property ownership but don’t have enough available cash.
You could choose whether to go with:
Lifetime Mortgage
A roll-up plan that will decrease your final inheritance as equity release interest is added and compounded
Interest-Only Lifetime Mortgage
Another option which would allow you to repay the interest component each month, keeping your balance in check and conserving your inheritance.
To summarize, equity release can be a fantastic way to provide the gift of financial security for your heirs. It can be used for the transfer of business assets, or as an alternative in situations where you need some cash flow but don’t want to sell your home. The idea of using equity release as a way of gifting is becoming more popular and it can be the perfect solution for many people.
Equity release should not be an end all solution, but it does offer many people peace of mind and is worth considering if you have substantial assets that need protecting from inheritance taxes or other costs when passing them on. However, if you’re considering this type of financial transaction make sure that you have all the facts and understand how it will benefit you and your loved ones.
