More and more people are considering equity release as a way to raise cash in later life. Factors including increasing life expectancy, coupled with a state pension age that is a moving goal post, are just some of the reasons why equity release is becoming a more popular option in retirement.
However, you may have heard or read some stories about equity release and be second guessing whether equity release is safe or a good idea.
Is Equity Release Safe?
Releasing equity from your home is a huge decision that is not to be taken lightly, and whilst it is not suitable for everyone, it is most certainly a safe option.
The Equity Release Council, formed in 1991, is the UK trade body for the sector and has been promoting high standards of conduct to protect the interests of borrowers for the last 30 years.
Since 2004 the equity release sector has been regulated by the Financial Conduct Authority which has seen regulations improve and consumer confidence increase. There are significant consumer protections in place to safeguard borrowers and ensure they receive the right advice for their individual circumstances.
For example, members of the Equity Release Council are required to provide only products that come with a ‘no negative equity guarantee’. This means that you or your estate will never owe more than your property is worth when it is sold. What’s more, borrowers have the right to live in their home until they move into long term care or die.
Is Equity Release a Good Idea?
When deciding whether to release equity you are required to seek both financial and legal advice. You must consult an equity release advisor to determine whether it is a good idea for you and is suitable for your circumstances.
When speaking with an advisor, they will explore all other available options first before recommending equity release. For example, they will consider whether you could sell assets, remortgage, use savings, draw from a pension, or downsize. This is an essential and mandatory part of the equity release process to help safeguard the interests of homeowners.
Equity release can help improve a borrower’s standard of living and quality of life during retirement. It can be the difference between struggling to make ends meet and living comfortably without financial worries, and in such circumstances, it is most certainly a good idea.
How to Get the Right Equity Release Advice
Throughout your equity release journey, you want to ensure that you are getting the right advice. When finding a suitable advisor, lender, and solicitor you should check whether they are members of the Equity Release Council. Not all providers are members of the Equity Release Council, but for those that are members, you can rest assured that you are protected by the Council’s standards including the ‘no negative equity guarantee’ and the security of tenure to stay in your home for life. You can find all members on their website here. Personal Retirement Planning is a team of specialist equity release advisors and proud members of the Equity Release Council. We can help you decide whether equity release is a good idea for your circumstances. To learn more about how we can help, please call Barry Leigh on 07980 210953 or email firstname.lastname@example.org.