Overview
Equity release can be helpful, but it is important to understand the costs and risks before you commit. The main cost is interest, and the main risk is that the amount owed can grow over time.
Interest and roll up
Most equity release plans are lifetime mortgages. This is a loan secured against your home. Interest is added to the loan, and if you do not make repayments, the interest can build up over time. This is often called roll up.
Impact on inheritance
Because the loan and interest are repaid from your home when the plan ends, it can reduce the amount left to your family. Some plans offer inheritance protection, but this can reduce how much you can release.
Early repayment charges
Equity release is designed to be long term. If you repay early, you may face early repayment charges. These vary by lender and plan, and the charge can be significant in the early years.
Fees and other costs
There may be lender charges such as an application fee or valuation fee, plus solicitor costs. We will explain what costs apply and when they are payable.
Means tested benefits
Taking a lump sum or holding cash savings can affect means tested benefits. This is one reason advice matters, especially if you receive support now or may need it in future.
Property and moving home
You usually need to keep your property maintained and insured. If you want to move, the plan may be portable, but the new property must meet lender rules.
If you are still at the early stages, it may help to read what equity release is and the application process. You can also use our calculator for an estimate.
If you would like to understand the costs clearly and check whether equity release is suitable for you, contact us today for personal advice with no obligation.