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What do I need to consider?
Please be aware of the following points when you are considering equity release:
- If you are receiving state benefits, equity release could affect your entitlement. You should be able to get more information on any impact and the best solution for your needs, by asking a specialist adviser.
- If you want to repay the loan early you might face early repayment charges, since the products are designed to run for your life.
- The option to move home, which is available with all SHIP (Safe Home Income Plans) approved schemes, also depends on provider criteria and the approval of the new property by the provider of the plan.
- The value of your estate will be reduced by any equity release scheme. If you have family who will inherit your home you should therefore involve them in the decision.
It is also advisable to take a close look at your current financial situation to plan your retirement finances effectively. The following questions could help you with that:
- Am I happy with my income? Can I maintain my lifestyle now and in the future?
- Could inflation lower my income and savings?
- How much inheritance tax will my estate potentially be liable for? (Equity release could lower this liability)
- Who would pay for my long term care, if needed?
- What state benefits do I currently receive? (Equity release might influence this)
- Could your income change over the coming years e.g. by paying off a mortgage?
- What if your partner became ill or died?
Alternatives to equity release that you should consider are:
- Downsizing, i.e. moving to a smaller property
- Moving in with family
- Obtaining money from family
- Taking out other borrowing options
- Using savings or investments
- You may decide it's best to do nothing