News

Aug 28

Downsizing? Think Carefully.

By Geoff Charles

Whilst thousands of older homeowners consider moving to a smaller property to release cash to live on, fund home improvements or offer financial help to their family, it has to be said this is not always the best option; emotionally or financially.

Downsizing often involves moving away from friends and family, as well as the gut-wrenching act of giving up a property that has been the family home for many years.

It can also carry a stack of costs too. Conveyancing fees, Stamp Duty, valuation charges and moving costs all add up and can take a large portion out of the proceeds of the sale, thus considerably reducing the expected revenue, sometimes by several thousands of pounds.

And there is another financial issue that needs to be considered by anyone considering downsizing: if a homeowner suddenly has a large sum of money, it could quickly depreciate and must be maximised to provide the best income possible. Additionally, Inheritance Tax planning is usually of vital importance. In summary, there is a great deal to consider when downsizing and it should never be something that is done without taking professional advice, or without considering alternatives.

So what alternative?

Equity release. Billions of pounds worth of equity is tied up in UK property and equity release plans allow homeowners over the age of 55 to release this equity — in the form of tax-free cash — from their homes so that they can live a more comfortable life. Despite the stigma attached to the old-day plans, homeowners should rest assured equity release is now safe, providing independent financial advice is taken from a specialist company regulated by the Financial Services Authority (FSA) that only recommends products endorsed by Safe Home Income Plans (SHIP).

Downsize, or release equity? It’s your decision, but don’t make it without taking independent financial advice; it could make a substantial difference to your financial future.

Bower Retirement Services is an FSA regulated independent financial advice company that offers specialist advice on equity release throughout the south of England. For more information e-mail info@brsequity.co.uk or call 0800 4118668. Bower Retirement Services offers a free, no obligation initial consultation to homeowners considering Equity Release.