Emma Simon

Equity release mortgages: a ‘get out of jail free’ card for homeowners?

It might seem as though houses are priced in monopoly money these days – but don’t assume the roof over your head will be your ‘get out of jail free’ card when it comes to saving for a pension.

It’s not hard to see why so many are lulled into a false sense of security. Many people have made thousands – if not hundreds of thousands – of pounds from the property market by doing nothing more risky than buying a modest family home and living in it while their kids grow up.

The boom over the last few decades can seem like the golden goose that won’t stop laying: a recent report by a London School of Economics professor (albeit sponsored by Santander) suggested that prices could double again in the next 15 years.

Some have dismissed these findings as optimistic – but it’s hard not to shake the feeling that even with a few Brexit-related stumbles on route, property prices are on a one way trajectory.

If money is tight for pension savings, or returns have been lacklustre of late, why not dip into these property gains to ensure a similar standard of living in retirement?

The main stumbling block is the difficulty in turning these notional gains into hard currency. The most cost effective way is downsizing, in other words cashing in your chips and moving somewhere smaller and cheaper.

But to maximise the value in your home you need to move somewhere significantly smaller (losing one bedroom is barely going to cover the stamp duty and estate agents fees) or to a vastly cheaper area. Exchanging your chi-chi postcode for a slightly more down-at-heel area nearby isn’t going to release untold wealth. The reality is few 60-somethings want to downsize to a two-bed flat or move hundreds of miles across the country when they first retire. Besides,

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