The popularity of equity release is growing, but is this a good move?

Posted on October 30, 2019

Equity release is no longer the niche lending area it once was with more and more homeowners over 55 choosing to release cash tied up in their homes and there are few signs of this trend subsiding.

Lending in 2018 increased by 27% compared to the previous year and is now nearly double what it was in 2016.

“It’s likely that the UK’s growing elderly population, where many don’t have the pension security of generations past, is partly behind this expansion,” said Pearson conveyancing executive, Gillian Hawley.

The growing variety of equity release products on the market could also be a factor. Newer products mean that homeowners are able to gradually release money from their property rather than taking it as a lump sum.

But is Equity Release a risky option?

Equity release doesn’t exactly have a squeaky clean reputation. There have been worries around mis-selling and there are occasions where relatives have found themselves receiving less inheritance than they might have expected - because of the way interest accumulates over the years people can end up owing a large amount of money that is paid back from the value of the property when a person dies or goes into care.

Whether equity release is a suitable solution really depends really on a person’s individual financial and personal circumstances.

“As well as getting sound financial advice beforehand, it’s always best to be open with loved ones about releasing equity from your property,” said Gillian.

Two in three complaints a year to the Financial Ombudsman come from relatives of people who have died or gone into care. It can save a lot of upset later on to be open about releasing cash from a property when you do it, rather than further down the line.

The bottom line is that equity release can play a crucial role in supporting a full retirement, alongside pensions, savings and other assets, for the right homeowner. Since homes are most people’s largest asset, it makes sense to at least consider how this asset can be used to fund retirement.

“Downsizing in later life is another way of releasing money from your home and at Pearson we have experienced conveyancers working alongside independent in house financial advisers so we can advise on ways to increase your financial security in later life,” she added.

For advice on your home move or to chat to one of our experienced conveyancers call 0161 785 3500

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.