Is Equity Release Worth It?
The idea of using equity release to fund retirement has been around for decades, but it is only recently that the market has evolved to offer a range of products and solutions. The benefits are clear: you can access cash without selling your home or downsizing your lifestyle, and you can leave an inheritance behind for someone else. But what are the risks? Is equity release a good idea? And what alternatives exist?
Equity release shouldn’t be taken too lightly. If you’re considering this type of financing, it’s important to understand the potential risks and benefits.
You need to take a look at your options before making any commitments.
The obvious alternative is reverse mortgage: if equity release isn’t right for you, there are other ways that may be more suitable. Speak with an advisor in order to find out what makes sense for you as a specific individual; requirements vary based on factors such as age, health (including mental health), family situation and income levels.
If there is no inheritance involved – that is if parents want their kids or grandchildren to inherit their home when they pass away – then equity release might not be necessary because the child can use the house themselves after inheriting it.
Also, some risks of equity release include following problems: you could run out of money, your house could be repossessed and you may have to pay tax.
Selling the property is one way that people can access their equity without releasing it – but there are drawbacks such as having a higher stamp duty bill for example. A reverse mortgage might also work for some people who need more funds; this type of home loan does not require repayments until after death or when the borrower moves from the home.