If you are thinking about releasing money from your property, equity release is not the only option worth considering. A good adviser will always explore alternatives before recommending a lifetime mortgage - and in some cases, a different approach may suit your circumstances better. This guide sets out the main alternatives to equity release, what each one involves, and when it might be the right fit.

Downsizing

For many homeowners, the most straightforward way to release property wealth is to sell their current home and buy something smaller and less expensive. The difference between the sale price and the purchase price - minus costs - goes directly into your pocket as cash.

Downsizing works well if you are happy to move, if a smaller or more manageable property would genuinely suit your lifestyle, and if the area you want to live in has suitable properties available at the right price. It preserves your estate in full, avoids any loan or interest building up, and gives you a clean financial slate.

The drawbacks are practical and personal. Moving home is disruptive, expensive in itself, and for many people means leaving a home and community they love. If the right property is not available locally at the right price - which is a common problem in many parts of Lancashire - downsizing may not deliver the funds you are hoping for.

Retirement interest-only mortgage

A retirement interest-only mortgage (RIO) is a mortgage product specifically designed for older borrowers. Like a standard interest-only mortgage, you pay the interest each month but do not repay the capital. The capital is repaid when you pass away or move into long-term care and the property is sold.

The key difference from a lifetime mortgage is that monthly interest payments are required. This means a RIO keeps the loan balance from growing, which can preserve more of your estate. However, it also means you need a reliable income to service the payments - typically a pension or other regular income that the lender can verify.

A RIO can be a good option for people who want to access property wealth, have sufficient income to make monthly payments, and want to avoid the compound interest that builds on a roll-up lifetime mortgage. At Aspect Mortgages, we assess RIOs alongside lifetime mortgages for every client where both options could apply.

Using savings and investments

If you have savings, investments, or other assets, drawing on these before considering equity release is often worth exploring first. Unlike a lifetime mortgage, using savings has no interest cost and no impact on your estate beyond the amount drawn.

The considerations are around how much you have available, how long it needs to last, and what happens if you deplete savings earlier than expected. For people with modest savings who need a significant sum, savings alone may not be enough - but using them alongside a smaller equity release could reduce the amount borrowed and therefore the long-term interest cost.

Pension drawdown

If you have a defined contribution pension that you have not yet fully accessed, drawdown may be an option worth discussing with a financial adviser. Depending on your age and the size of your pension pot, drawing additional income or a lump sum from your pension could meet your needs without involving your property at all.

Pension income and equity release can also work together - your pension adviser and your equity release adviser can coordinate to make sure the two elements of your plan complement rather than conflict with each other. This is something we are experienced in working through alongside clients' financial advisers.

Grants and local authority support

Depending on your circumstances, age, and the reason you need funds, you may be entitled to grants or support that does not need to be repaid. Local authority grants for home adaptations, the Disabled Facilities Grant, and other means-tested support schemes are worth investigating before committing to any form of borrowing.

Eligibility varies and the application process can be slow, but where grants are available they are almost always worth pursuing first. Your local council or Citizens Advice can advise on what you may be entitled to.

Family lending or gifting

Some homeowners are in a position where family members are willing and able to lend or gift money, removing the need for a formal product altogether. This can work well where the amounts involved are manageable and the family dynamics are straightforward, but it is important that any such arrangement is properly documented to avoid misunderstandings later.

Where family members lend money with the expectation of repayment, the terms should be set out clearly in writing. Where money is gifted, both parties should be aware of the potential inheritance tax implications if the donor passes away within seven years of making the gift.

When equity release may still be the right answer

The alternatives above all have their place, but none of them suits every situation. Downsizing requires a willingness to move. A RIO requires regular income. Savings and pension drawdown require existing assets to draw on. Grants have strict eligibility criteria. Family arrangements are not available to everyone.

For homeowners aged 55 and over who want to stay in their home, do not have sufficient income for a RIO, and do not have other assets to draw on, a lifetime mortgage may genuinely be the most suitable option. The important thing is that this conclusion is reached after a proper assessment of all the alternatives - not as a default.

How Aspect Mortgages can help

At Aspect Mortgages, we never recommend equity release without first understanding whether an alternative might suit you better. Richard, Rachel, and Neil are all qualified to advise on equity release and are experienced in working through the full range of options with clients across Lancashire and beyond.

If you would like to talk through your situation - with no obligation and no pressure - call us on 01257 812345 or visit our equity release page to find out more.