Advantages & Disadvantages of Equity Release

There are a number of advantages to equity release, just as there are a number of disadvantages. As it would be with any form of loan, mortgage or investment, it all depends on your personal circumstances on whether it’s right for you.

What Is the Main Advantage of Equity Release?

The main advantages of equity release are the option of releasing a tax-free lump sum and the protection to live in your home until you die. The main disadvantage is the high cost to your estate once you are gone.

Don’t worry though, we’re here to help you get a good idea on whether it’s an option worth considering. Read on to get up to speed on all the advantages and disadvantages.

Looking for other information on Equity Release? This guide has info on 'The main Equity release advantages and disadvantages' We have also writen extensively about:

• - Equity Release is perfect if you need additional money to pay for care
• - Equity Release is perfect if you need to clear some debts
• - How does equity release drawdown work?
• - Can you release equity on a buy to let mortgage?

We update all our guides regularly. If you are researching Equity Release and we haven't got an exact guide that helps you, keep coming back as we update daily.

The Advantages of Equity Release

The main advantage of equity release is that lets you unlock a large sum of money from your property, without needing to make contractual repayments immediately.

So whether you’ve had your eye on releasing equity for home improvements, or you’ve got a holiday property you would love to own, or you simply need extra funds during retirement to get by, you can release it from your home without needing to make payments back until you’ve passed away.

And even though you’ve secured the loan against your home, you’ll be guaranteed to be allowed to live there until you either die or go into full-time care. Because you aren’t making repayments immediately you can’t fall behind, so your home is yours to enjoy regardless without being under threat.

The Disadvantages of Equity Release

The primary disadvantage of equity release is that it is usually more detrimental to the value of your estate than other forms of cash generation in retirement. If you choose a lifetime mortgage, you could end up owing a lot more than you borrowed due to high interest payments.

Or, if you opt for home reversion, your home will be owned by the lender, but you’ll only get a fraction of its worth during your lifetime.

Your equity will generally grow if you keep it tied up in your property so you aren’t just losing actual money but also potential growth cash too. And the other major disadvantage is just how much you will receive. If you’re 55 you might only be eligible for up to 10% of the value of your equity, meaning you need to wait until you’re much older to really take advantage.

Equity Release: Ways Around the Disadvantages

There are ways around all of these disadvantages, whether you delay equity release, choose a drawdown plan to reduce interest or ringfence part of your property to be kept out of the agreement, so you guarantee to have something to pass on to your loved ones.

Ultimately it will depend on your personal circumstances and existing investments on whether it’s right for you. If you want to know more, just take a look around our website and read more of our in-depth guides.

How Can Money Savings Advice Help You With Releasing Equity?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.