Issues to Consider If You Are Thinking of an Equity Release Plan

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Equity release has become an increasingly popular option for homeowners across the UK over recent years, but consumers are often finding themselves in difficulty if they have not taken the correct advice.

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According to reports on this facility market, billions of pounds worth of funds are being accessed each year, and yet often homeowners do not fully understand how the exercise works.

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Advice

The first point of call if you are thinking of releasing the equity from your home is to seek the advice of a regulated financial adviser and check the Financial Conduct Authority’s listings for these professionals.

As an adviser you will want to be confident that you are using the optimal software for financial advisers which will ensure you are able to offer up-to-date information to meet the client’s needs. Information on this software can be found online, so click here to get options on software for financial advisers.

Equity release is generally seen as an opportunity to free up some cash from your main asset, either for more cash in retirement or to improve your property and add value. It can help you release some wealth that you have accumulated over the years and can seem an attractive option. It remains, however, a potentially expensive and long-term commitment.

Equity release is not a cheap option, and you should consider taking professional advice from a registered financial adviser who has access to the latest software for financial advisers.

Base Rates

A lifetime mortgage, which will be used to free up the capital in your home, can be a costly option. Even so, it will probably be cheaper than an alternative home reversion scheme.

Although Base Rates from the Bank of England are at very low levels, lifetime mortgages – the most popular vehicle for equity release – remain at comparatively high levels and are expensive compared with conventional mortgages.

There are now 38 retirement interest-only mortgages (RIOs) on the market – up from a handful a few months ago. The FCA reclassified these instruments from a form of equity release to standard mortgages in 2018. Such mortgages are increasingly popular with lenders and offer a serious alternative to equity release facilities.

The availability of this option, particularly for older borrowers, is something you should discuss with your registered adviser.

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