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What are the risks of Equity Release?

Equity Release Code of Practice

All of the plans that we recommend must follow the regulations set out by the Safe Home Income Plans (Code of Practice) Lifetime Mortgage Code of Practice.

The most common misconception about equity release today is that you have to give up ownership of some or all of your home. This is not the case. Well over 95% of our clients elect to take out a modern form of equity release known as a lifetime mortgage or drawdown lifetime mortgage. With both of these plans, you release a proportion of the equity in your property whilst continuing to own it 100%. This means that you continue to benefit from any increase in your property value in the future.

Also, all of the plans that we recommend must follow the regulations set out by the Safe Home Income Plans (SHIP) organisation. As such, they are all 'portable', so you can still move home, taking your equity release plan with you.

Although there are now many safeguards to protect you, the borrower, you should still ensure that you are aware of all of the implications before entering into a Lifetime Mortgage. The following are some points to consider:

• Because the funds that you release, plus any interest accrued, are paid back from your estate once you pass away, a lifetime mortgage will reduce the value of your estate and the amount that you will be able to pass on to your beneficiaries.
• It is possible that the additional funds made available to you through equity release could affect your entitlement to means-tested state benefits.
• Two alternatives to releasing equity are downsizing to a cheaper property and/or taking in a lodger.
• Some equity release plans impose an early-repayment charge, so you could incur charges should you wish to pay them off before your death. However, like a standard mortgage, these will vary from plan to plan, reinforcing the benefit of specialist equity release advice before you proceed.

Equity Release Advice

If you are concerned by any of these points, please feel free to contact us for equity release advice or give us a call on 08080 555 222, where one of our fully qualified equity release advisors will be able to give you the facts based on your own circumstances.

Your tax position and eligibility for means tested benefits may be affected, the value of your estate may reduce as might your options for moving or selling your home in the future

Find Out More

• The SHIP Equity Release Code of Practice
• Why choose an Equity Release Plan from us?
• Try our Equity Release Calculator