Over the years Equity Release has sometimes had a bad press.
This is probably fair, as there have been occasions and examples of Equity Release solutions being misplaced or advised when it has not been the right solution for the borrowers.
Or lending schemes have been too expensive, or the terms attached too restrictive.
In today’s market, Equity Release is heavily regulated, there are considerable consumer protections in place and the advice available is both professional and robust.
This helps to reassure those of you looking at Equity Release that you should only ever end up with this as a viable solution if it makes sense.
That being said, as with many financial transactions with unknown future pathways attached to them (for example, in this case, property price movements and how long you will live), there will always be subjectivity in the equation..
You cannot possibly know for sure if the decision to use Equity Release is correct, as opposed to alternatives, until you have the benefit of hindsight. Many years down the line.
Of course, the exact same point applies to deciding not to use an Equity Release solution!
All of this emphasises the need to tread carefully and there will be plenty of people who explore Equity Release options, who – quite rightly – don’t proceed to use it as a solution.
However, there are many cases where it will act as the perfect solution. These tend to be where the relationship between wanting to stay in one’s home and the need for additional capital and/or income pass through a particular threshold.
All cases are going to be best judged on their individual merits but the threshold is where typically the equity value is better released through an Equity Release scheme, than through downsizing or some other form of fund raising. And where the borrower prizes remaining in their existing home.
This always has to be tested against those particular individual requirements and circumstances, but what one normally has to do is stretch the view out over a longer period to say “what is the real priority here?”. The answer to that typically relates to lifestyle factors, and because this is during the retirement period, people want to relax, enjoy their retirement and make the most of their wealth in their lifetime.
One will never know for sure if Equity Release is the perfect solution, until later when one can look back knowing what has happened, but when the conditions are right this type of scheme can be a game changer for millions of people, and it should be on most people’s agenda to at least explore this at an appropriate stage.
