The Pros And Cons Of Equity Release

By Author: souy rsou
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For anyone looking at equity release seriously, the most important thing is to do your homework, make sure you know all the pros and cons. It is a capital mistake to think of it as money for nothing and anyone considering it should seek advice from professionals and actually talk the whole thing through. There are numerous independent online sites with equity release calculators and reams of information, but the ones to look at are those who offer a more one on one service, where you can speak to people either on the phone or face to face to have your key retirement solutions. It’s not just a matter of checking the calculator and seeing what you can get, equity release schemes are complex, there are a lot of factors taken into account, there are a lot of equity release offers out there, it’s important to get advice tailored to your situation.

In other words; anything I write here can only be a guideline to help you think about possible benefits and problems, don’t base a decision solely on this.

PROS

Releasing equity on your house can give you a lump sum (or income) while you can ...
... continue to live in the house for the rest of your life (if you wish).
If you do not wish to stay in the house you can usually still move (though there may be penalties).
If you only release part of the equity you have the option of releasing more in the future if you wish.
For older people it can give an independent source of income without having to rely on family members.
The No Negative Equity Guarantee ensures that, despite changing house prices etc, the borrower will never have to repay more than the value of the house itself.
Because the value of your house will no longer be included as part of your estate when you die, equity release can reduce inheritance tax.
If your circumstances change you can pay back the loan early (see CONS for more).


CONS

You will no longer own your home (an obvious thing to say but some people do not take the reality of this into account).
Equity release can reduce the amount that your family inherit (depending on the value of the house among other things).
Equity release schemes always involve fees. (If you use an equity release calculator make sure you take this into account.)
Because of these fees (and interest), you will not get as much money through an equity release scheme as you would through selling your house. You might even be able to move to a smaller house and still be better off.
If for any reason (change of circumstances etc) you wish to pay back the loan early, early repayment charges will almost certainly apply.
Both your tax bill and any state benefits you claim can be affected if you release equity on your home.
Your age will affect the amount you get and whether or not you can even apply.

Again, this only covers the basics and does so without going into detail, and again, that’s because in equity release every situation is unique. It is highly recommended that you seek advice from independent professionals.

This writeup has been submitted by Macro. To know more about Equity Release please browse, http://www.keyrs.co.uk/equity-release/, http://www.keyrs.co.uk/equity-release/schemes/ and http://www.keyrs.co.uk/equity-release/.