The Pros And Cons Of Equity Release

The Pros And Cons Of Equity Release

For adults of pensionable age, there are many ways in which to provide themselves with an extra income to help support their retirement years, and one of these ways is through equity release. The term equity release applies to homeowners who use their homes to generate a continuous income or lump sum, whilst continuing to live in their existing home.

You wouldn’t jump straight into other financial products without independent legal advice, so the same applies with equity release plans. To help you understand how equity release works, we have come up with the basic pros and cons to consider before using equity release as a way to provide extra income.

There are of course some serious benefits to equity release plans. Most people who decide equity release is a good solution for them do so because they will have access to a significant income or lump sum. One of the other main advantages of equity release is that the homeowner gets to stay in their home for the rest of their life, should they wish to do so. Some equity release plans will allow the person to move later on, although this should be confirmed before hand.

As with all financial products, there are also disadvantages to equity release. An obvious con is that the value of the home or estate will be reduced, meaning less is handed over to the beneficiaries after death. Equity release can also work out more expensive in the long run, and it does mean selling or borrowing against your home, so make sure you consider all options before choosing equity release.

There are, however, some clear, undeniable advances to equity release, and that for many homeowners it is the most viable way to enhance retirement finances. For many it is a great alternative to moving to a cheaper home, meaning that the homeowner gets a generous retirement income as well as avoiding the stress of downsizing to a smaller house.