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Advantage & Disadvantages of Equity Release

Equity release or a lifetime mortgage, is a financial product that allows homeowners, typically those aged 55 and older, to access some of the equity tied up in their homes.


While it can provide financial relief & flexibility, it’s essential to consider both the pros and cons before deciding if it’s the right option for you.

Pros of Equity Release:

Access to Money:
Equity release provides a lump sum or regular income, allowing homeowners to access the value of their home without selling it.

No Monthly Repayments: One of the most significant advantages is that you generally don’t need to make monthly repayments, therefore not impacting your disposable income 

Stay in Your Home: You can continue to live in your home for as long as you wish, maintaining your independence and comfort.

Flexibility: The money released can be used for various purposes, such as home improvements, debt consolidation, supporting family members, or enhancing your retirement lifestyle.

Tax-Free Funds: The released equity is typically tax-free, which means you won’t have to pay income tax on the money you receive.

    Cons of Equity Release:

    Reduced Inheritance: Equity release reduces the value of your estate, potentially leaving less for your heirs. This can be a significant concern for those wanting to leave a substantial inheritance.

    Costs and Fees: Equity release comes with various fees, including arrangement fees, legal fees, and valuation fees. The interest on the loan can also accumulate over time, significantly reducing the amount left for your beneficiaries.

    Interest Accumulation: With some equity release products, interest accumulates over the years, compounding the debt and potentially eroding the remaining equity in your home.

    Impact on Benefits: Receiving a lump sum from equity release may affect means-tested benefits or grants you are eligible for, so it’s crucial to consider these implications.

    Less Competitive Interest Rates: Equity release interest rates tend to be higher than standard mortgage rates, which can lead to substantial long-term costs.

    Complexity and Commitment: Equity release can be a complex financial product with legal implications. It’s essential to seek professional advice and carefully consider the long-term commitment.

    Market Fluctuations: The value of your home may not increase as expected, impacting the amount of equity available for release.

    Before proceeding with equity release, it’s vital to consult with a financial advisor who specialises in this area and explore alternatives such as downsizing or other retirement funding options. Make sure you fully understand the terms and conditions of any equity release plan and consider how it aligns with your financial goals and estate planning objectives

    Think carefully before securing a loan against your home.

    Talk to our Equity Release Advisors

    Equity release is a complex product, and it is essential that correct advice is received. Our brokers will explore all options with you to ensure the correct product and advise is provided. Other options, such a standard mortgage or a retirement interest only (RIO) mortgage, may be a more appropriate alternative, so after an initial meeting we can consider all options available to you.

    If you want to discuss Equity Release or find out more about your options, please feel free to contact us 01920 821333.

    Any initial conversation or meeting will carry no cost and we will ensure you are fully aware of all potential costs and commitments before progressing any application. We would also ask a friend or family member be present for any potential meetings if you would prefer this option.

    A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.

    Speak With One Of Our Advisers

    For any further information please feel free to contact us either by telephone, email or via contact us on our website. You will receive a response within 24 hours of your enquiry.

    Call 01920 821 333Or enquire here