Reasons to explore equity release and what to consider

Equity release advice

As an independent financial adviser, I often work with clients who are considering equity release as a way to unlock some of the value in their homes. Equity release can be a useful financial tool, but it’s important to understand the reasons why clients take out equity release and the potential risks involved. In this article, I will outline the main reasons clients take out equity release and what to consider before taking this step.

Reasons Clients Take Out Equity Release

Supplementing Retirement Income

One of the most common reasons clients take out equity release is to supplement their retirement income. Equity release can provide a lump sum or regular income that can help to cover living expenses and improve their quality of life in retirement.

Paying for Care

Another reason clients take out equity release is to pay for care. As people get older, they may need to pay for care in their own homes or move into a care home. Equity release can provide a way to access funds to cover the cost of care.

Repaying Debts

Clients may also take out equity release to repay debts, such as credit cards or loans. This can provide a way to reduce monthly expenses and improve cash flow. Some clients may with to release equity in their home to repay their mortgage so they don’t need to continue making monthly repayments.

Home Improvements

Equity release can also be used to fund home improvements, such as a new kitchen or bathroom. This can improve the value of the property and make it more comfortable to live in.

What to Consider Before Taking Out Equity Release

Impact on Inheritance

One of the main considerations when taking out equity release is the impact on inheritance. Equity release reduces the value of the property, which means there may be less to leave to beneficiaries. It’s important to discuss this with family members and make sure everyone understands the implications.

Interest Rates

Equity release schemes typically charge higher interest rates than traditional mortgages. This means that the amount owed can grow rapidly over time. It’s important to understand the interest rates and how they will impact the amount owed over the long term.

Alternatives

Before taking out equity release, it’s important to consider alternative options. For example, downsizing to a smaller property can provide a way to access funds without taking out equity release. Other options may include using savings or investments to cover expenses.

Independent Advice

Finally, it’s important to seek independent financial advice before taking out equity release. An independent financial adviser can help to evaluate the options and provide guidance on the best course of action. Mather & Murray Financial have specialist equity release advisers based in Swindon, Cardiff and Brighton and can arrange appointments nationwide.

In conclusion, equity release can provide a way to access funds and improve financial security, but it’s important to consider the implications and seek independent financial advice before making a decision.

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