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The Pros and Cons of Equity Release

As some people get close to retirement age or enter later life they find the need for additional income. One way to access some cash is with an equity release plan which can provide the funds to go on some much deserved holidays, make home improvements or simply enjoy retirement, whilst continuing to live in your property.

Equity release can be a great option for some people, but it is a major financial decision which should never be taken without independent professional advice.

Here’s our guide to some of the pros, cons, advantages, risks and benefits of equity release, helping to answer those vital questions with informed, accurate, objective, fair and balanced information you can trust.

Is Equity Release right for everyone?

There is no ‘one size fits all’ when it comes to financial products such as equity release and what suits one person could be detrimental to another.

At Bower, we take the time to ensure that any decision you make is right for you and your individual circumstances. We always suggest to our customers that if they wish, they can involve their family in the entire process, allowing for clear, honest and open communication about the impact of equity release.

If our advisers feel that equity release is not the right product for you, then they will let you and your family know straight away and offer guidance on alternatives that may be more suitable to your needs.

What Are The Pros and Cons Of Equity Release?

Equity release can be a great way to turn your property into a source of income or cash lump sum to spend as you wish, but this comes with some big implications which is why it’s important to fully understand and comprehend all of the advantages and disadvantages of these plans.

The Advantages of Equity Release

  • You can 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 of Equity Release

  • 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, asking family for help or taking out an unsecured loan are some other options.

Impartial Equity Release Advice You Can Trust

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 and our knowledgeable advisors will be happy to answer any questions you may have.

Our home finance specialists are here to help our customers make smart, safe, informed decisions by providing open, honest, impartial advice – always.

Bower provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,495 be payable.

To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or join our live chat you’ll find on our website.

If you are considering equity release, we strongly recommend that you read our ‘Advantages and disadvantages of Equity Release’ page carefully and talk to one of our specialists before deciding if you wish to proceed.

This is a lifetime mortgage or home reversion plan. To understand the full features and risks, please ask us for a personalised illustration.