Advantages and Disadvantages of Equity Release Schemes
Advantages of Equity Release Schemes
- Improving your quality of life
- Release money for large capital expenses
- 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
- 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 will 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 it 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