Is Equity Release Is a Good or Bad Idea?

Equity release has historically had a less than stellar reputation due to high-interest rates and the impact it can have on your estate when you die or move into care.

However, as interest rates have fallen, as long as you take the right advice and only use equity release if it’s right for you then it is definitely a good option to have available.

Equity Release Is Safe

As with any form of lending, the suitability of equity release depends on your situation but it is a safe, viable form of borrowing. Poor advice can lead to taking a loan when you shouldn't.

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Looking for other information on Equity Release? This guide has info on 'Are equity release schemes a good idea?' We have also written extensively about:

• - Are equity release rates falling?
• - Is equity release a good or bad thing?
• - Can equity release be mis-sold?
• - Can equity release be paid off early?

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.

Why Is Equity Release a Good Thing?

Equity release can be useful if you want to unlock the cash tied up in your home, but you don’t want a traditional re-mortgage that requires you to make monthly payments. You get to enjoy the benefits of a cash lump sum, without adding to your regular outgoings during retirement.

You can use the money for a variety of purposes. It could be really useful if you’re concerned your pension income alone won’t support you. Or you might want to invest it into home improvements or a second property.

What makes equity release more appealing is how lenders will only consider you if a legitimate financial adviser has worked with you to explore your options, meaning you won’t be taken advantage of.

The only time equity release is a bad thing is if your lender doesn’t insist on this evidence of formal advice, or your speak to an adviser who tries to force you down a certain path.

Equity Release: Why Does It Have a Bad Reputation?

There’s a historic reputation that equity release isn’t fair since the interest rate is high. And it is true that you can end up owing a lot more than you originally borrowed, as you won’t be making any repayments which mean the interest compounds on the full amount.

If you take equity release as soon as you turn 55, and you live well into your nineties, then the total repayable amount could be significant.

Yet despite that, you’ll never owe more than the total value of your home, thanks to a ‘No negative equity guarantee that any reputable lender will include. And depending on your circumstances, equity release may be the only option to you if you want a cash lump sum in retirement, so the high interest is the price you’re willing to pay.

In short, equity release is a good option to have on the table but it won’t suit everyone. As long as you get financial advice from a reputable, qualified adviser and they present it to you as one of a range of choices, and you fully understand the costs involved, you may find it’s just right for your circumstances.

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.