Over 1,500 5-Star Reviews 
Try Our Free Calculators
Follow us on Social Media
Over 1,000 5-Star Reviews 
Try Our Free Calculators
Follow us on Social Media
Home » Services » Specialist Services » Equity Release » Pros and Cons of Equity Release

Pros and Cons of Equity Release

Ciarán Power

Last Updated: February 2nd, 2024 at 6:43 pm

Table Of Contents

Introduction

Equity release schemes offer a way for older homeowners to access the wealth tied up in their homes, but it’s important to understand both the benefits and drawbacks of such a decision. This balanced overview aims to provide clear insights into the pros and cons of equity release.

Advantages of Equity Release

  • Access to Cash: The most obvious benefit is the ability to unlock the equity in your home, providing you with a lump sum, regular income, or both.
  • No Moving Required: Unlike downsizing, equity release allows you to stay in your home while accessing its value.
  • Tax-Free Funds: The money released is tax-free and can be used for a variety of purposes, from supplementing retirement income to funding home improvements or even helping family members financially.
  • No Negative Equity Guarantee: Most plans come with a ‘no negative equity guarantee’, ensuring you never owe more than the value of your home.

Disadvantages of Equity Release

  • Reduced Inheritance: Releasing equity can significantly reduce the amount of money you can leave as an inheritance.
  • Compounding Interest: If you opt for a plan where you don’t make regular interest payments, the interest compounds over time, increasing the total amount to be repaid.
  • Impact on Benefits: Taking out an equity release plan can affect your eligibility for means-tested benefits.
  • Early Repayment Charges: If circumstances change and you wish to repay your equity release plan early, you may face substantial charges.

Summary

Equity release can offer financial freedom and the ability to remain in your home, but it also has long-term financial implications, particularly regarding inheritance and potential changes to state benefits. It’s crucial to weigh these factors and consult with a financial advisor to ensure that an equity release plan aligns with your overall financial situation and future goals.

Found what you're looking for?
Let's get you the outcome you deserve.
Call us, reach out on social media, or fill out our super simple online form for a free chat, no strings attached.

Our Services

Our core offerings are mortgages, specialist services, and protection. Click below to find out more!

Mortgage Services

For those looking to remortgage, purchase and everything in between, we have a solution
tailored to you!

Specialist Services

These services differ from traditional mortgages, but are viable options for many homeowners across the UK!

Protection Services

It's so important to ensure you have adequate cover in the event of time off work, critical illness, or if you pass away.