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2nd February 2021

Topping up your retirement fund with Equity Release

Coronavirus has impacted upon our lives in ways we never thought possible. At the beginning of 2020 no-one would have believed the life changing affect this virus has had on everyone of us.

For those heading towards retirement, Covid-19 has created very real concerns with a large chunk of the population now worried about how they will cope when they stop working.

Effects of Covid-19 on Retirement

The Interactive Investor’s annual retirement survey* published in October 21 looks at the effects of Covid-19 and how the market turmoil that followed has affected people’s finances and their expectations. More than one in eight survey respondents who are yet to retire believe they will need to delay retirement because of the downturn in financial markets caused by the coronavirus pandemic. This rises to one in five in the 60-to-65 age range.

The top financial concern among retired responders is the prospect of a stock market crisis. Plummeting stock markets in February and March 2020 provided a real-time illustration of the potential for falls in investments that may previously have been considered relatively secure.

Bank of Mum and Dad

The survey also highlights the increased pressure on the Bank of Mum and Dad and the worry that many parents and grandparents might unwittingly put their own finances at risk to help out loved ones. More than half of the survey’s retired parents have helped their child with a house deposit – a rising number have gifted money (two in five retired parents), and others have provided loans (one in 10). Of non-retired parents who have taken a lump sum from their pension, one in five have used it to help their children.

Tax-free cash to boost your retirement pot or help a member of your family

The option for the over-55’s to top up or fund their retirement pot by taking out tax-free cash, either as a lump sum or in monthly payments, from the equity in their homes has proved extremely popular. It’s also increasingly being turned to as a tool to assist younger family members, especially when it comes to first-time home buyers. According to data from the Halifax, in 2020 the total available equity for release in UK homes among the over-55s hit £591bn.

According to data released by Key, in total £530m was gifted to family and friends by the over-55s during the first nine months of 2020 and £230m of those funds were used for house deposits.

If you’re interested in finding out more about Equity release, check out the video below and then give us a call. There are important factors to consider so it’s important that we talk you through all the pro’s and con’s. We have access to 1,000’s of mortgage products across the whole market so will find the right provider, with the right deal for your individual circumstances.

Our fees and charges vary depending on the Services we provide to you. We typically charge an admin fee of up to 1% of the mortgage at the time of applying for the full mortgage application. We will also be paid commission from the lender. The precise amount will depend on the complexity of the work involved and will be discussed and agreed prior to submitting the mortgage application. The Finance Roome Limited is authorised and regulated by the Financial Conduct Authority, ref 745454.

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