Six alternatives to equity release

Equity release allows you to access a cash lump sum by taking out a loan that is secured against your home. For some it can be a useful way of accessing funds to help out family, pay off an existing mortgage, repay existing debts such as credit cards, or boost your retirement income.

It’s certainly not something to be taken lightly however, and it won’t be suitable for everyone. There are significant costs involved and releasing money from your main home comes with a number of risks. You can read more information about equity release and how it works here.

Looking for equity release help?

We’ve partnered with Key Advice Group, a member of the Equity Release Council, who have an “excellent” customer service rating on Trustpilot. If you are interested in a free, no obligation conversation with one of their equity release specialists to see what type of equity release product might be suitable for you, you call 0800 188 4813 now or request a free callback.

Potential alternatives to equity release

Taking out an equity release product is a big financial decision and if you need to raise extra funds, it isn’t your only option. Before committing to any particular course of action, it can be extremely helpful to consider if there are any other potential alternatives to equity release that might help you achieve what you need.

Consider downsizing or moving to a cheaper property

Depending on your health, financial commitments and overall circumstances it might be worth considering downsizing or moving to a cheaper area if you need to raise a large amount of cash.

It’s worth pointing out that this can still come with significant moving costs such as estate agents fees, removal costs and stamp duty charges. The upside however is that you will know exactly where you stand and hopefully will be able to clear all your debts. Depending on how much cheaper the property you move to is, you may even have a cash surplus to help live off.

The reality of downsizing is that financial considerations will only be one part of the decision. Many people choose to move to a cheaper property for health or lifestyle reasons – a smaller house to maintain, fewer stairs, a bigger garden in a cheaper more rural location etc. It’s also important to think about the downsides of moving, not only are there costs involved but if you move away from friends and a strong sense of community – it can have a significant negative impact on your quality of life. Learn more about downsizing and whether it could be the right option for you in our article Five questions to ask yourself if you’re considering downsizing.

Remortgaging or taking out a retirement interest-only mortgage

If you’re still paying off an existing mortgage, you may be able to extend the term or even borrow more depending on your circumstances. Age alone is rarely an issue for people when they come to remortgage these days – more often than not, it is the income affordability assessments that the mortgage provider has to do that restrict the availability of mortgages on offer and the amount you can borrow. These are typically stress-tested under scenarios where interest rates rise significantly. They must also factor in any fall in income you might experience after you retire to check the repayments will still be affordable.

If you would like to explore the regular mortgage options that might be open to you, a fee free mortgage broker will be able to help. We’ve partnered with Fluent Mortgages to offer free, expert advice – they will be able to talk you through your options. If you’d like to do that, you can arrange a callback here. You can also compare mortgage rates from the whole of the market using our mortgage comparison tool.

Another mortgage option that might be available is a retirement interest-only mortgage. These are similar to a standard interest-only mortgage where you only have to pay the interest on the loan each month however there is one crucial difference. It is assumed that the loan itself will only be repaid when you die, or sell the house. This means that the affordability criteria is assessed on your ability to make the interest payments and you don’t need to prove your ability to repay the loan itself at the end of the term, as you would with a standard interest only mortgage. It also means that you may be able to access additional funds when you remortgage. You can read more about interest-only retirement mortgages here.

There are a number of fee free RIO mortgage brokers available in the market, but if you are looking for somewhere to start, we’ve partnered with Tembo Money. They can provide you with a free consultation and research the various options on your behalf to help you decide whether a RIO mortgage might be right for you.

Drawing money from your pension

If you are over 55 and have a defined contribution pension, you might want to consider drawing money down from your pension as an alternative to equity release. Accessing your pension is a significant financial decision however that you will need to consider carefully. With increasing life expectancy and a rising state pension age, it’s vital to think about how you will fund your retirement and consider the long term impact on your retirement income of dipping into your pension savings.

If you have a defined benefit or final salary pension and are considering transferring it to a defined contribution pension to access some of the cash built up in it, this is very rarely the right decision. You can read more in our guide Should I transfer my final salary pension.

For more information about accessing your pension savings you might want to consider reading the following guides:

In addition to our free resources, there are other sources of help available. If you’re 50 or over and have a defined contribution pension, you can get free guidance on the options available to you from the Government’s Pension Wise service.

However, if you want personal recommendations or advice about your specific circumstances, you’ll need to seek professional financial advice. You can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guides on How to find the right financial advisor for you or How to get advice on your pension.

If you think you might be interested in speaking with a financial advisor about your pension, VouchedFor is currently offering Rest Less members a free pension check with a local well-rated financial advisor. There’s no obligation, but once you’ve had your check, the advisor will discuss the potential for an ongoing paid relationship if you think it might be useful to you.

Unsecured loan

If the amount you’re looking to access is relatively small and you can afford the monthly repayments, you could consider a personal loan or balance transfer credit card to help make ends meet in the short term. Before taking out a 0% balance transfer credit card, it’s important to make sure you are confident that you can pay down the balance before the rate reverts to its expensive standard rate. You can read more about the difference between balance transfer credit cards and personal loans.

Cutting costs and making a strict budget

We know it’s not always possible, but if there is any chance you can raise the money you need from cutting costs and living off a strict budget it is certainly worth considering. No doubt it will be more difficult in the short term, but your long term financial health will thank you for it. We have several articles that may be of interest on this topic.

Try to boost your income

Depending on your personal circumstances, you could consider taking on a full or part time role to make ends meet. It won’t be suitable for everyone and is a very different lifestyle choice but if you are interested in exploring options, on our careers hub we have tens of thousands of jobs with age diverse employers across the country.

It’s also worth ensuring that you are claiming all the Government benefits you are eligible for, especially if your income has fallen recently, you may be eligible for financial help from the government. To find out which benefits you may be entitled to, and how to claim, visit the government’s benefits calculator here.

Where can I get advice on equity release

If you don’t think any of these alternatives will help you achieve your goals and you want to find our more about accessing money from your home through equity release – you can find more information in the following articles:

As releasing equity from your home is a significant financial decision, it can be helpful to do as much research as possible before making any decisions. It’s currently a requirement that you speak to a qualified financial advisor before signing up for an equity release plan, to ensure that it is suitable for your circumstances and that you’ve made an informed decision based on all the available information.

It’s essential to use an advisor who has an equity release qualification and who can recommend a suitable product for you from a member of the Equity Release Council, which is the trade body for the equity release sector. This ensures that a number of minimum product standards will be met to help safeguard borrowers.

If you’re looking for somewhere to start, we’ve partnered with Key Group who are one of the more established providers and offer fee-free advice on their range of equity release products. They are a member of the Equity Release Council and have an excellent customer service rating on Trustpilot. If you are ready to speak to someone, you can request a free, no obligation callback with one of Key’s equity release specialists here. Alternatively, if you’d like to talk to someone now, you can call them on 0800 188 4813.

See how much wealth you could unlock from your home with this free, easy to use calculator. Fill in a few details to get an estimate – and if you’d like some advice, arrange to speak to an expert.

Links with an * by them are affiliate links which help Rest Less stay free to use as they can result in a payment or benefit to us. You can read more on how we make money here.


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