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
When it comes to children, parents know that they will always want the best for their child. The most typical motive these days is to assist people in getting on the property ladder, whether as first-time buyers or as those looking to move upscale. By using equity release to gift, they can use some or all their inheritance to get a foot on the property ladder now.
Other motivations for parental gifting could include assisting the children in starting their own business. 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:
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.