Advice - Equity Release Pros And Cons

Posted October 15, 2010 – 5:01 am in: Mortgages
     

For men and women of a pensionable age, there are various means to provide themselves with an income during their retirement years, and one of the most popular ways to do so is through equity release. The term equity release refers to homeowners using their homes to generate extra income or a lump sum, whilst still remaining to live in their current house.

Before considering any financial product, including equity release plans, it is important to seek independent legal. And so to help homeowners out, we have come up with a few of the crucial pros and cons to outline whether or not equity release could be a viable solution to generating an income.

To start off, there are some serious benefits to consider with equity release plans. Most homeowners deciding that equity release is the best solution for them do so because they will be able to get a significant income or lump sum to support their retirement. Another of the main advantages of equity release is that the homeowner, should they wish to, will get to remain in their house for the rest of their life. Should the person wish to move later on, some equity release plans allow this, although this should be confirmed before the plan is taken out.

As with all financial products, there are also disadvantages to equity release. An obvious con is that the value of the home or estate will be reduced, meaning less is handed over to the beneficiaries after death. Equity release can also work out more expensive in the long run, and it does mean selling or borrowing against your home, so make sure you consider all options before choosing equity release.

However, there are some clear advantages of equity release, meaning that for many homeowners of pensionable age, it is the best, most viable way to enhance their retirement finances. Because it is also an alternative to moving to a cheaper home, the homeowner would not only have access to an income to help lead a comfortable lifestyle, but they also would avoid the stress of downsizing to a smaller home.

For further equity release advice, you should always seek the assistance of an Independent Financial Advisor.

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