Equity Release advantages and disadvantages

Every single financial decision you make throughout your life will have advantages and disadvantages, and Equity Release is no different.

So is equity release a good idea? Well, before making a final choice about whether or not an Equity Release plan is right for you, it’s important to be aware of all the pros and cons.

Is Equity Release right for everyone?

Equity Release may not be the perfect option every time. So at Bower we take the time to ensure that any decision you make is right for you and your individual circumstances.

This is why we always suggest that you involve your family in the entire process (if you want to, of course), that way the impact of equity release can be discussed with those you care about. And if our advisers feel that Equity Release is not the right option for you, they will let you and your family know straight away.

To help you decide whether an Equity Release plan may be a good option for you, we recommend you read all the advantages and disadvantages we’ve listed below.

The Advantages

  • You continue to live in your own home, rent free, for the rest of your life or until you move into permanent residential care.
  • The ‘no-negative equity guarantee’ means that you will never have to repay more than the value of your home and your estate will never owe more than the property is worth when it is sold.
  • The tax-free cash that you release can be used for anything you like from home improvements, clearing a mortgage or debt, to the holiday of a lifetime.
  • With some plans, there are no regular payments to make, the option is yours.
  • The flexibility of modern equity release plans means that you can release the money as a lump sum, or a lump sum with a drawdown facility.

The Disadvantages

  • The value of your estate will reduce and the amount you can pass on in inheritance via your estate will therefore also decrease.
  • Your entitlement to certain state benefits may be affected.
  • If you wish to repay or end the plan early there may be financial penalties in doing so.
  • Some lifetime mortgages are paid back with compounded interest meaning that over the longer term the amount you owe can grow quite quickly.
  • You should always consider the alternatives. Equity release is just one possible option for acquiring tax-free money from your home; downsizing or taking on a lodger are two other options.

Find out more about Equity Release

If, having read all those advantages and disadvantages, you would like to know more about Equity Release, just get in touch with the Bower team today. We’ll be happy to answer any questions or concerns.

In fact, our expert advisers are always here to help you make an informed decision by giving you open, honest, impartial advice. And discussing all the pros and cons of Equity Release mortgage plans, and how they impact your individual situation.