Few things in the money world get as much comment or generate stronger feelings than the idea of Equity Release, with some people seeing this as a panacea to many financial needs in retirement, others seeing it as a risky, inappropriate thing to do.
As you might expect from us, we see neither as the right answer to the question of whether Equity Release is good or bad, as it doesn’t work like that.
Equity Release is an option for people who are around retirement age (normally defined as 60 and above) and who have “equity” in their property.
The idea being that this can be released in part, as a lifetime mortgage, so that the asset value in the property becomes cash or income in the hands of the property owner.
The answer to whether that is a good exchange is totally dependent on the individual’s or couple’s circumstances.
Sometimes it makes perfect sense, sometimes it doesn’t.
The key is for anyone who is in the position where it might work for them, to explore it.
Now, some important points come to the fore, because if you are wishing to explore equity release we strongly suggest you do so with an expert who can:
- Access alternatives, so they are not an expert who works solely for an Equity Release company, who has limited alternative options to advise. So, we think it is better to use a firm (like Signpost) that can take a wider view and compare and contrast various options to help you
- Utilise various Equity Release lenders, again providing choice and options within the range, if Equity Release is suitable
Fortunately, to protect against poor decisions, you cannot legally proceed with Equity Release unless you take appropriate qualified advice. This is to stop inappropriate practices or selling.
Remember, Equity Release is borrowing against an asset, so it is going to have risks or aspects to it which need to be carefully weighed up.
However, it is sometimes the only way this asset can be used to help with lifestyle, lifetime gifting, or income requirements in a way that does not involve selling the house or downsizing (which many people don’t want to do).
It is a balancing position, like many financial decisions, between different needs and wishes, and this means inevitably it is never a good or bad idea unless judged against the individual circumstances and requirements.
Sometimes it is a very good idea, sometimes a very bad idea.
You can only really know in your own individual position if you explore it, and see how it may work for you or not.
There are some financial transactions where advice helps, there are others where it is essential. This is one of those areas, if you need to look into your retirement finances and needs further, then it is essential you get independent advice. We can help you with this.