Advantages Disadvantages of Equity Release Schemes

Published / Last Updated on 12/03/2017

Equity Release Pros and ConsAdvantages & Disadvantages of Equity Release Schemes

Advantages of Equity Release Schemes

  • Improving your quality of life
  • Improving your cashflow
  • Release money for large capital expenses
  • Increase income
  • Control
  • Spend money that may otherwise be means tested later for care fees
  • Spend money that may otherwise be suffer inheritance tax
  • Protected from negative equity if scheme is under Equity Release Council Rules
  • Flexibility to increase/drawdown more capital in future
  • Simple
  • Stay in your own home
  • Make home improvements
  • Protected by financial regulator
  • Protected by Financial Ombudsman Service
  • Only specially qualified financial advisers can advise you
  • Legal advice to protect you
  • Free to move home/downsize in future
  • Free to make financial gifts to family

Disadvantages of Equity Release

  • Maintaining your home is still your responsibility
  • You get reduced value and not full market value
  • Interest rates are higher than normal mortgage rates
  • If you do not spend the money released and leave ot in the bank you may suffer reduced income support or council tax assistance benefits
  • The longer you live, the greater the financial loss
  • For Home Reversion, you lose future growth in the value of your home and there is no going back

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