Mortgage expert Andrew Milnes on later life borrowing and releasing equity from your home

If you’ve started to feel like you’re rattling around in your house, then there could be some benefit to downsizing your property, not least that looking after a big house can become a burden. If this sounds familiar to you, then downsizing might be the right option. But the process of moving to a smaller house – or taking equity out of your home – isn’t as straightforward as it once was. There are important considerations for those looking to downsize or borrow into later life and it helps to seek expert advice before making any important mortgage-related decisions.

DOWNSIZING: Moving home can be an emotional rollercoaster, especially if you’ve lived in one house for a long time and have many happy memories there. However, there are several advantages to downsizing, such as releasing equity, allowing you to live more comfortably within your means while simultaneously boosting your finances. Potentially, you could sell your house and use the equity to buy your new home. There might even be some money left over to go into a savings account or be put to one side for your children’s inheritance.

The possibilities are endless but unfortunately the process is more complex that it once appeared, so it’s important to get your ducks in a row before finding your next home. Gone are the days of making an offer on your new place before putting your own house up for sale. Instead, when you find a property that’s right for you, you need to make sure you’re in a position to proceed, especially when the market is as buoyant as it is today.

However, it’s not uncommon for homeowners to feel nervous about putting their home on the market, so it’s important to remember that when you’re selling a property, you are in control and putting your house up for sale by no means makes you homeless. If downsizing is on your agenda, it might be worth booking an agent valuation too, primarily to understand your financial position. If you’d rather not list your house before finding somewhere else to live, then it’s perhaps time to think outside the box. You could consider short-term finance options or use some of your savings if that’s an option available to you.

LENDING INTO RETIREMENT: Borrowing into later life is a game changer for some homeowners and there are a number of well-known, reputable lenders that will allow customers to borrow money up to the age of 95, subject to caveats including a pensionable income or sufficient equity in the property. Offers such as this are typically available with building societies, where decisions are made by an individual member of staff, applying common sense, opposed to larger high street lenders that will perhaps automate such decisions.

Your situation might mean that you’ve wanted to take money out of your property to help your children, or buy a holiday home, but if you’ve still got a good income coming in and can afford the payments, your mortgage options are likely still strong. There is a strong market for buyers to extend their borrowing period into retirement with the additional option of equity release solutions.

Seek expert advice when making or extending large financial commitments so you can make an informed decisions and protect your finances for the future. Andrew Milnes, Business Principal at Mortgage Advice Bureau, Bingley, Tel: 01274 568832

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