Key Points to Consider
While the appeal of equity release
is clear, there are some important considerations that must be factored in. Before going ahead, it’s useful to use an online equity release calculator
to find out exactly how much of your home’s value you could release. In addition, seeking independent advice
from a reputable consultant
If you choose to go ahead, you’ll need to bear the following key points in mind:
- Equity release typically attaches higher interest rates than a conventional mortgage or remortgage. Depending on your circumstances and requirements therefore, there may be better deals available than an equity release scheme. All of which can be discussed with an independent broker.
- Home reversion schemes are accessible and readily available, though offer significantly lower values than were you to sell your property on the conventional market. The benefit being the speed and simplicity of the equity release option.
- Depending on the deal you agree to, you may be contractually obliged to oversee and pay for the upkeep of your home for the duration of the agreement.
- Your entitlement to state benefits may be affected by the money you receive by way of an equity release scheme. If you live in an extremely valuable home and release a large part of its value, it could alter your eligibility for state benefits and support.
- Arrangement fees of anything from £1,000 to £3,000 typically apply to equity release schemes in the UK.
- You may find it more difficult to qualify for equity release if you are under 55 years of age, though specialist deals for younger applicants are available.
- If you change your mind after signing up, exiting an equity release deal earlier than agreed can be difficult and costly.