Making the most of your property equity now

User Written by Cindy-Marie Leicester on October 14, 2016.

Making the most of your property equity now

Some people are surprised when they ask me ‘What should I do with my wealth?’ and I reply ‘Spend it!’. That might sound like rather irresponsible advice but I don’t really mean for them to go squandering it on a Ferrari or a luxury yacht (although, to be honest, it’s their money and if that’s what they want, why not?). What I do mean is that for those lucky enough to be living a retirement of financial security with money to spare, gifting to their families can enable them to enjoy witnessing how the fruits of their labours can help pass on that security to future generations.

To all intents and purposes that is what is happening with many property-rich baby boomers who own houses which are constantly rising in value. Figures published by the Equity Release Council have revealed that almost £400mn of equity was released from homes in the first quarter of 2016, a record-breaking amount. Equity release enables older homeowners to free up the wealth tied up in their houses without having to commit to monthly repayments. The cash is often used to help struggling children or grandchildren to climb on to the property ladder or to clear debts including credit cards, loans and mortgages. With property prices increasing, this recycling of wealth is often the only way the younger generation can afford to put down a deposit on a home.

For many of us, our estate planning is designed to ensure that our families are left comfortable. If this is the case for you and your financial situation is such that you are able to make gifts while still maintaining your standard of living and without putting your own future financial security at risk, why not activate that plan now? If you survive for seven years after the gift is made, there is the added bonus of avoiding inheritance tax on the money too! For further advice on gifting, please feel free to contact me.

Cindy-Marie Leicester provides will writing services as a third party professional adviser and Infinity Financial Solutions Ltd takes no responsibility for the goods and services provided by any third party to whom clients are referred.

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