Although there are many benefits to choosing equity release, it is important to understand that there are also possible risks involved.
Firstly, it is essential that the equity release provider that you choose is a member of the trade body SHIP (Safe Home Income Plans), who ensure that all members give fair and straightforward advice as well as giving a no negative equity guarantee on your loan.
Considerations…
• The inheritance you leave is likely to be greatly affected. Any funds you are able to release, plus any accrued interest, are paid back from your estate once you die so a lifetime mortgage will reduce the value of your estate and the amount that you will be able to leave behind to any beneficiaries.
• It is quite probable that the supplementary funds made available to you through the equity that is released could affect your entitlement to means-tested state benefits.
• A number of equity release plans impose a hefty early-repayment charge, so you could incur charges should you wish to pay them off before you pass away. However, like any standard mortgage, these will vary quite considerably from plan to plan, reinforcing the need to get advice from an independent expert before you proceed.
• There are usually arrangement fees of up to £750 and legal costs can set you back between £300 and £700. There may well also be a valuation fee which is generally around £200 for a £250k property.
• Two alternatives that may be seen by some as less of a commitment are downsizing to a cheaper property or moving to a less desirable area, and/or getting a lodger in.
There are a number of other aspects to consider in the world of equity release, so it is vital that you make an appointment to see an independent specialist and that you talk over every aspect with your loved ones.
Equity release solutions are provided by
Age Partnership
