More and more retired homeowners are using their property wealth to gift money to their family. The money is being used for a variety of reasons, including to help their children to get a foot on the property ladder, to buy a car or start a new business.
According to analysis from leading over 55s retirement specialist KeyRetirement.com, pensioners are gifting nearly £40,000 to their family, with over one in five accessing the money in their homes to treat their children and grandchildren.
What is the Money being used for?
A key reason parents are offering financial support to their children is to help them get onto the property ladder with them gifting over £33,000 on average towards house deposits.
Other popular reasons include around £6,000 being spent on buying cars and some £11,000 going towards family weddings. Many are also getting a helping hand to start a new businesses.
And the generosity goes beyond the children to grandchildren too with an average of nearly £25,000 going towards giving them a helping hand.
Key believes the benefits of the money raised through equity release is seen by many as the best early inheritance that they can give.
Dean Mirfin, technical director at KeyRetirement.com, comments: “Attitudes to inheritance are changing as people recognise the many benefits of using property wealth to help their family and friends while they are still alive.
By taking advantage of the tax free benefits of equity release many pensioners can control how the money is used as well as see the immediate benefits of the gift they are giving their loved ones.
Many see this early inheritance as a much greater benefit today than their children inheriting from them later.”
Diane Ray, MoneyHighStreet.com, comments ‘Equity release is a popular choice for many retired homeowners and using it to help family members is obviously a wonderful and very rewarding option for many. Whilst there are clearly many upsides, however, as with all financial decisions, it is important to properly assess the options available and take professional advice if need be.’
The equity release market is constantly changing and there are a variety of plans available, including a
- Lifetime Mortgage – a long term loan secured against the value of your home, usually at a fixed interest rate and only repaid when your house is sold.
- Drawdown Lifetime Mortgage – similar to a lifetime mortgage, however you can draw down the loan money in smaller amounts to meet your needs. The big difference is that you only pay interest on the amount you have borrowed.
- Home Reversion Plans – whereby you sell all or part of your property to a reversion company who in return provide you with a cash lump sum.
Fundamentally equity release may absolutely be right for your needs. However it may not and that is why you need to ensure you gather as much information as you can and seek professional advice if need be so that you can make a fully informed decision.
You may find Key’s independent guide to equity release useful and you can get a copy of this by visiting www.keyretirement.co.uk/equity-release/free-guide/