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Is Equity Release Safe?

Equity Release & Lifetime Mortgages Plan will reduce the value of your estate and can affect your eligibility for means tested benefits. Inheritance and Estate planning is not regulated by the Financial Conduct Authority.

When it comes to equity release, one of the main questions on everybody’s lips is: Is it safe? In this quick, jargon-free guide, we’re going to answer that question once and for all, explaining the pros and cons of equity release to help you decide whether it may or may not be worth considering. Without further ado, let’s begin!

So, is it safe?

In a word, yes. Because all providers of equity release schemes are closely regulated by the Financial Conduct Authority, you can rest assured that they’re safe products – and many plans on the market today feature no negative equity guarantees. This means that you’ll never find yourself owing more than your property is worth when it’s sold – peace of mind for both you and your loved ones.

Although equity release is certainly safe, that doesn’t mean it’s right for you. There’s an awful lot to consider before going ahead, which is why seeking the advice of an expert is recommended first. They’ll be able to tell you whether or not it makes sense for you, and recommend plans that meet your requirements.

Factors to consider

If you’re not yet ready to speak to a financial adviser and are simply in the research phase, here are a few pros and cons to help you get started.

The pros of equity release are likely what drew you to the idea in the first place. Providers will tell you how it can give you money to spend now, allowing you to enjoy your retirement the way you’d imagined. And this is true. For many people, equity release can transform their financial outlook and really allow them to live life to the fullest – and who doesn’t want that?

There are some cons to consider, though. If you don’t choose a plan with a no negative equity guarantee, you could end up owing more than your property is worth when it’s sold due to compound interest – although this only applies to lifetime mortgages. Home reversion plans avoid this pitfall; you’re not charged interest, as you simply sell a percentage of your home to the service provider. Other disadvantages include reducing your estate – made worse by the fact that equity release doesn’t pay out the full market value of your home.

Despite these pitfalls, it may be well worth considering – just make sure you seek the advice of an expert first. If you’re based in or near Northampton, take a look at our Equity Release Northampton service; our experienced advisers can help you decide whether equity release is for you – and guide you through the process of choosing a plan. Interested in learning more? Contact us today.


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