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Are equity release schemes any good?
Equity release is safe as it’s regulated by the Financial Conduct Authority (FCA) and overseen by the Equity Release Council (ERC). Their rules and safeguards ensure you always own your home and have flexibility to move. In addition, all FCA and ERC governed lifetime mortgages come with a no negative equity guarantee.
Why equity release is a bad idea?
The main disadvantage of equity release is that it does not pay you the full market value for your home. Another downside of equity release is that it will reduce the amount of inheritance your beneficiaries could otherwise receive. The specific risks vary with the type of scheme you choose.
What are the downsides to equity release?
What are the drawbacks of equity release?
- Your debt is increased by interest.
- Your benefits might be affected.
- You might be subjected to early exit fees.
- You can’t leave your home as an inheritance.
- You have to pay set up fees.
- You won’t be able to take out another loan against your house.
Is equity release better than a mortgage?
You may be able to unlock more cash from your home with equity release than if you were to remortgage. This is because you don’t have to make any monthly repayments. By contrast, a mortgage lender will only lend you what you can afford to repay each month from your income.
Can you lose your house with equity release?
The simple answer is NO. You cannot lose your house with an Equity Release Lifetime mortgage (with some reservations!) The following information is true of any Equity Release lifetime mortgage that is governed by the Equity Release Council and its rules.
Can I sell my house if I have equity release?
Many standard equity release schemes allow you to move your mortgage to a new property if you decide to sell your house, provided the lender approves the property first. In this situation, you may have to repay some of the mortgage early, potentially triggering early repayment charges.
What is the best age to take equity release?
The “core” age group for those signing up to equity release tends to be 65 to 75. However, Dean Mirfin at independent specialist firm Key Retirement says: “Equity release customers are getting older – the average age rose to 71 in 2015, from 69 previously.”
Can you pay back equity release?
Equity Release plans are designed to run until the death of the last borrower, or when the last borrower moves into long-term residential care. Despite this, you can make payments against the Equity Release plan, or repay it in full at any point in time.
What is the interest rate on equity release?
What are the interest rates for equity release? The average equity release interest rate was 4.07% on 26 April 2021. The interest on your lifetime mortgage will depend on how long it runs for and what type of plan you choose.
How is equity release paid back?
At the end of an equity release, the lender will need repaying. Most plans are repaid from the sale proceeds of your property. The money owed can be repaid from other means, or the property refinanced, should your beneficiaries wish to keep the property.
Does equity release affect your pension?
Your private and state pension is unaffected by equity release. However, the guarantee credit part of pension credit, which tops up the statement pension to increase pensioners’ weekly income, can be affected.
Do you have to be 55 to get equity release?
Unfortunately, no. Equity release lifetime mortgages are only available to those aged 55 or over, and you typically have to be older still (aged 60 or even 65) for a home reversion plan. However, there are alternative products to equity release that those under 55 can benefit from, including loans and remortgaging.