Equity release is no longer the niche lending area it once was. More and more homeowners over 55 are choosing to release cash tied up in their homes and there are few signs of this trend subsiding.
Lending in 2018 increased by 27% compared to the previous year and is now nearly double what it was in 2016. It is likely that the UK’s growing elderly population, where many do not have the pension security of generations past, is partly behind this expansion. The growing variety of equity release products on the market could also be a factor. Newer products mean that homeowners are able to gradually release money from their property, rather than taking it as a lump sum.
Is it a risky option?
There have been past accusations of mis-selling and there are occasions where relatives find themselves receiving less inheritance than they might have expected.
Because of the way interest accumulates over the years, people can end up owing a large amount of money that is paid back from the value of the property when a person dies or goes into care.
Whether equity release is a suitable solution really depends on a person’s individual financial and personal circumstances.
As well as getting sound financial advice beforehand, it is always best to be open with loved ones about releasing equity from your property. Two in three complaints to the Financial Ombudsman about equity release come from relatives of people who have died or gone into care. It can save a lot of upset later on to be open about releasing cash from a property when you do it, rather than further down the line.
Downsizing in later life is a way of releasing money from your home. However, in the right circumstances equity release can play a role in supporting a full retirement, alongside pensions, savings and other assets, for the right homeowner. If you have any questions about ways you can increase your financial security in later life, please get in touch with us directly.
7 May 2019
The views expressed in this blog do not in any way constitute advice and are specific to the date noted. As time passes the facts can change and readers should consult their adviser for up to date advice on any matters covered within the blog. Invest Southwest offers an initial review, which is free of charge, however long it takes. From this we will be able to confirm how we can help and give you an opportunity to decide if you would like us to. Thereafter, we will provide you with detailed recommendations and exact costs. Please note that we promise not to levy any kind of fee unless we can demonstrate a benefit to you.