Is Equity Release a Good Thing?

Are You Thinking About Equity Release?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Is Equity Release Safe in 2022? What Are the Pros & Cons of Equity Release? Discover If It’s For YOU…

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It’s a burning question on everyone’s mind as the equity release market explodes in 2022: Is equity release a good idea?

It depends on whom you ask. 

Experts across the industry debate this important question, as over 4.8bn equity is being released annually. 

But, what is the truth?

Fortunately, our SovereignBoss team has done extensive research, and we’ve found the answers you’ve been looking for. 

Through this article, you’ll discover: 

  • If equity release is a good thing. 
  • The downsides of equity release.
  • How to know if equity release is right for you.

Our editorial team analysed market trends and looked at how today’s industry is structured to determine our results. 

So, is equity release a good idea? 

Find out now!

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TABLE OF CONTENTS

What’s Equity Release?

Equity release is a set of financial products designed for homeowners over 55 years to access the money tied into their property while still being able to live there.

If you’ve managed to pay off most or all of your entire existing mortgage, then it’s worth considering an equity release scheme and equity release might be a good idea for you.

Equity release can give you a large cash sum while allowing you to live on your property for life.

It’s particularly useful for you to access cash to cover your retirement expenses or the cost of additional later-life care.

You will need to have a comprehensive understanding of equity release before agreeing to one of these products, as they’re generally set for life.

The 2 main types of equity release are a lifetime mortgage and a home reversion scheme.

Lifetime Mortgage

A lifetime mortgage is the most popular form of equity release product. When experts speak about equity release, they’re often referring to the principles of a home reversion.

Here, you’ll unlock equity while still retaining 100% property ownership. 

Home Reversion

A home reversion scheme is less widely used, but it also has its benefits. 

Here, you’ll sell all or a portion of your property below market value1 while having the right to live there, rent-free, until you pass away or enter long-term care. 

Is Equity Release A Good Thing?

Yes, equity release is a good thing if you opt for a lender that’s a member of the Equity Release Council2

It allows you to access your property value but still stay home, and it’s a regulated industry. 

Of course, equity release has its pitfalls, so you should always speak to your financial adviser before deciding on an equity release plan. 

When Is Equity Release a Good Idea?

Equity release is a good idea if you’ve received confirmation from a financial adviser and exhausted all your alternatives. 

Is There a Downside to Equity Release?

Yes, there is a downside to equity release. Like all financial products, it comes with its pitfalls.

These include:

  • You won’t access your full property value.
  • You’ll leave a reduced inheritance. 
  • Interest can compound quickly if not repaid. 
  • It may impact your ability to qualify for means-tested benefits3.

Is Equity Release Right for Me?

Equity release is right for you if you’ve reviewed all your other options, you need income, you’re over 55, and you own a property in the UK valued at over £70,000. 

Of course, you’ll know equity release is right for you if a trusted financial advisor recommends it. 

Is Equity Release Safe?

Equity release is safe because the financial market in the UK is regulated by the Financial Conduct Authority (FCA).

This means that there’s excellent consumer protection in place, both with a lifetime mortgage and a home reversion scheme.

It’s also regulated by the Equity Release Council.

Common Questions

Is Equity Release Becoming More Popular?

Is Equity Release a Good or Bad Idea?

Conclusion

The answer to the question ‘is equity release a good idea’ depends on your personal needs. 

 Yes, equity release is a fantastic product as it’s fully regulated, with the Equity Release Council looking out for client safety.

At the same time, equity release isn’t a good idea if you want to unlock a full lump sum to blow on a leisurely expense without considering your financial future. 

For these reasons, you must work with a financial advisor; besides, it’s mandatory.

Find your ideal adviser today and start your stress-free equity release journey!

Before You Go…

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Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
John Lawson

Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.
francis

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
kath icon

Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.
nicola

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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As Featured In
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