In our previous articles, we have considered what equity release is, what it can be used for and how much it costs. There are however alternatives to equity release that should also be considered.

Using Savings or Investments – The cost of taking out a lifetime mortgage and the interest incurred is often likely to be higher than the rate of return achieved on other savings or investments. It can therefore often make sense to use these first before considering equity release.

Downsizing – It may be that the equity you require could be released by moving to a different property of lower value. This can be particularly attractive where the current property has become too big to manage easily.

Personal Loans – Where the amount required is relatively small and you have surplus income, it can be worth considering a personal loan, which often have lower costs to set up and administer than a lifetime mortgage.

Borrowing from Friends and Family- Equity release impacts different parts of the family, particularly those who stand to inherit from your estate. It can often be worth speaking to them to establish if there is a way that they might be able to lend the money or buy a share in the property.

Residential Mortgage – Depending on your age and income, it may be possible to take out a residential mortgage to provide you with the capital that you need. The advantage of this approach is that residential mortgages can be taken out on a repayment basis so that the debt will be repaid over time and the total interest paid is likely to be lower.

Retirement Interest Only Mortgage – This is a form of interest only mortgage, where only the interest is paid each month. It is similar to a lifetime mortgage in that it only needs to be repaid when you pass away or move into a care home. The major differences are that the monthly interest must be paid and the amount that you can borrow is assessed based on your retirement income rather than your age.

Equity release involves borrowing money against your property and it can affect your entitlement to state benefits and/or state funding for care costs. If you take out an equity release you will incur a debt and interest costs. Other more appropriate solutions may be available and professional advice is vital.

If you are considering whether equity release might be right for you, contact one of our qualified advisers for a free initial consultation. To arrange a no-obligation appointment, contact us today by telephone on 01626 242500 or email enquiries@wbwcfp.co.uk.