Avoiding an equity release disaster

Equity release mortgages may be a useful way of releasing money to fund a wedding or holiday, grandchildren’s education or their deposit for a first home, long-term care fees, or simply ensuring there is sufficient income in retirement – while still retaining the family home.

With the right advice, equity release schemes could be an excellent way of releasing cash from a property. But if you don’t take advice, they could turn out to be a disaster.

It’s a stark, uncomfortable fact but one that was underlined recently by the following cautionary tale of a lady who went directly to an equity release lender on the strength of a newspaper ad, instead of consulting an independent intermediary.

What she didn’t realise was that an independent adviser would have checked out whether the loan represented value for money, was competitively charged and suitable for her needs.

It turned out she could have got a much better deal had she used the services of an independent adviser, who would have:

  • Made sure that fees were fair rather than exorbitant.
  • Checked the client had the right income options of a lump sum or a regular income.
  • Arranged the correct type of equity release mortgage for her needs.
  • Structured the loan so she could get extra money without punitive penalties or charges.
  • Taken responsibility for the advice and backed it up with a formal letter of recommendation.

An independent financial adviser will always highlight all the options and allow the client to make informed choices about the correct loan for their circumstances.

If you have any questions about the best equity release mortgage for you, I’d be delighted to help.