The things you need to consider if you’re thinking about equity release
10 June 2020
The equity release market was quiet in the early weeks of the coronavirus lockdown, but that’s something that many are expecting to change, now that the industry has established protocols to support lending in our socially distanced world and as many people take stock of their changed financial circumstances.
One potential solution is to release equity from your home – this may be available to you if you’re aged 55 and over, or could be an option if you’re in that age bracket and want to help a loved one whose financial situation has changed. But before you consider releasing property equity, there are many things to think about.
Is equity release the right solution?
This is the first question to ask yourself. Equity release may be something for you to put in your menu of potential solutions, but there are other measures – including many introduced by the government – that you should also explore.
While this is the first question to ask yourself, it’s not one you can answer on your own. Equity release is complicated, and so is holistic financial planning – looking at your complete financial picture – so you need to work with experts who will help you understand all the options available to you and the pros and cons of each.
If you’re a business owner or want to help support a family business, you definitely need to be talking to your accountant. If you’re reviewing your domestic finances – or how you can support a loved one with their household bills – you need a financial adviser who will give you honest, objective advice. Our expert advisers are equity release specialists; they only advise on equity release, but they will talk you honestly through whether it may be an appropriate solution for your circumstances, and they will point you to other trusted professionals, including financial planners and mortgage brokers, if they think you would benefit from their expertise to find
Finding the equity release product that matches your needs
If you do decide that equity release could be an appropriate solution for you, there are lots of factors that we consider when identifying products that most closely match your personal circumstances and needs, including:
- The type of property: Different lenders have different criteria. Some won’t lend on properties with very large gardens, listed buildings or timber-framed buildings. (You can read more about factors that can affect how much equity release companies might lend you here).
- Your needs: How you want to use your equity release loan will affect which conditions may be acceptable to you and which could restrict your future plans. While most equity release loans are only repayable when you either move into long-term care or die, some can be repaid early without penalties; if you think you may downsize or move in with relatives in the future, this may be a key consideration.
- Whether you want to pay off the interest: Interest-only loans can mean you retain as much equity as possible in your property, but you need to have sufficient income to service the interest payments without compromising your lifestyle.
- Do you need flexible terms in case your circumstances change? If you’re not sure what your financial situation will be in the future, you may need a flexible product, for example one that enables you to switch from repaying the interest to rolling it up.
Finding you a competitive deal
Once we have identified the features you need in an equity release loan to match your personal circumstances, we will search the market to make sure we find a product that ticks your boxes while offering you a competitive interest rate. We use a number of whole-market sourcing tools that are constantly updated with the latest rates and offers, so you can have peace of mind that when we make our recommendations, we are putting forward the product/s that we think best supports your needs while giving you an competitive interest rate.
Interest rates are an important consideration when thinking about equity release – but they are just one of the factors to consider. Our equity release advisers apply their market expertise to make sure they recommend products that both match your needs and give you a competitive interest rate.