For some people, yes. For others, no. Anyone who says it is right, or wrong, for everyone is not giving you the full picture.
A lifetime mortgage, the most common form of equity release, is a long term loan secured against your home. It can solve real problems for people who want to stay where they are. It also has a real cost, and that cost comes out of your estate. Whether it is a good idea for you comes down to three things: what the money is for, what else you could do instead, and how much you actually need.
When equity release can make sense
It tends to fit people who want to stay in their home, have most of their wealth tied up in it, and have a clear use for the money.
The situations we see most often:
- A mortgage that needs clearing. The term has ended, or is about to, and selling looks like the only other option. A lifetime mortgage is not assessed on income, so it can work where an ordinary remortgage cannot.
- Work on the house. One of the most popular uses. A new roof, a shower room in place of the bath, an extension, or changes that make the house easier to live in for the years ahead.
- Helping family. Some homeowners want to help children or grandchildren, for example with a first home.
- Topping up income. When pension income falls short and the monthly budget is tight.
- Staying at home with care. Some people use it to pay for care in their own home rather than move out.
A specific need, a wish to stay put, and no better way of meeting it: when all three are true, it deserves a proper look.
When it is probably not the answer
This matters just as much. Equity release is often not the right answer, and Craig will tell you when it is not.
- You have savings that would do the job. We ask about savings and other assets for exactly this reason. We would not want to recommend borrowing if you already had funds that would be better to use.
- A retirement interest only mortgage may cost less. If your income supports a monthly interest payment, a RIO may cost less over time, because the balance does not grow. Your home may be repossessed if you do not keep up the payments.
- Moving would suit you better. Downsizing can free up money with no loan at all, and for some people it is genuinely the right answer.
- You may want to repay soon. We do not recommend these plans as a short term fix, and early repayment charges can apply.
- There is help you are not claiming. Sometimes there is a benefit going unclaimed, or a grant for the work you were planning to borrow for.
For the other routes side by side, see alternatives to equity release.
The real downsides
These apply to every plan. They are not small print.
It reduces your estate. Equity release will reduce the value of your estate, so there will be less to leave behind. It is worth talking through with your family.
It can affect means-tested benefits. The money released could affect your entitlement to means-tested benefits, such as Pension Credit, Universal Credit or Council Tax Reduction. We go through this with you, and you can run your own check first with the Turn2us benefits calculator.
Interest compounds if you do not pay it. On a lifetime mortgage where the interest is not paid, interest is charged on the interest as well as on the original loan, so what you owe can grow significantly over time. Modern plans let you pay some or all of the interest if you choose, which slows or stops that growth. There is more on this in what equity release actually costs.
Early repayment charges. If the plan is repaid early, the lender may apply an early repayment charge, and on a lifetime mortgage these can apply for a number of years. They vary considerably, so it is worth understanding yours at the outset rather than assuming.
It narrows your future choices. It is a long term commitment, and it can make refinancing or moving more complicated later on.
Is equity release a con?
No. It is a regulated product, and lifetime mortgages come with real protections, including the no negative equity guarantee, a rate fixed for life, and the right to stay in your home. You must also have independent legal advice before going ahead. We cover all of that in is equity release safe?, so we will not repeat it here.
But regulated does not mean right for you. The protections stop you owing more than your home is worth; they do not make it cheap. The useful question is whether this is the right way for you to get this money.
Plans have also changed. Historically, the interest simply rolled up for the life of the loan. Modern plans let you pay it monthly, now and then, or not at all.
Is equity release worth it?
That depends on what the money does for you, set against what it costs over time.
Two habits can make a real difference. Borrow only what you need, because the less you borrow, the less interest there is to compound. And think about drawdown, where you take what you need now and leave the rest in an agreed reserve, so you only pay interest on what you have actually taken.
If it is for something you could fund another way, it often is not worth it.
How to check any equity release adviser
We will not name or criticise any firm. Here instead are checks you can run on any adviser, including us.
Check the FCA register. Any firm advising on equity release should appear on the Financial Conduct Authority's Financial Services Register, which you can search free online by name or firm reference number. Ours is 952887.
Check Equity Release Council membership. The Equity Release Council is the industry body that sets standards for its member firms. Search Equity Release is a member of the Equity Release Council.
Ask what the advice costs, and when you pay it. Some firms charge an advice fee and some do not. Either way, you should know the figure and when it falls due before any work starts. Ours is a maximum of £1,495, payable only if your case completes.
Ask how much of the market they look at. We advise across the whole of the market on lifetime mortgages.
Expect questions about alternatives and savings. An adviser who goes straight to equity release without looking at the rest is not doing the job properly.
Expect the real numbers before you commit, with lender and solicitor costs confirmed to you in writing.
Never feel pressured. There is a cooling-off period during which you can reconsider, and you can take the time you need. Anyone who pushes for a quick decision, or quotes you a rate before they know your case, is a reason to pause.
Your family should be welcome. You are welcome to bring a son or daughter into the conversation, and we are happy to speak to anyone you give us authority to.
What an equity release adviser actually does
The FCA requires that you receive specialist advice, from a financial adviser and a legal representative. A good adviser starts with you, not the product: your goals, your income and outgoings, and your savings and other assets. Then they search the market, explain the risks plainly, and tell you when the answer is no.
Craig has three decades in equity release and is based in Garforth, in east Leeds. Advice can be by phone, video call or face to face.
Is equity release a good idea: common questions
Is equity release a good idea for me?
It can be, if you want to stay in your home, have a clear use for the money, and there is no better way to meet that need. It is usually not the right answer if savings, a retirement interest only mortgage, downsizing or an unclaimed benefit would do the job. The only way to know for your own case is to look at it properly.
Is equity release a bad idea?
Not in itself, but it is a long term loan with a real cost. It is a bad idea when it is used where a cheaper or simpler option would work.
Which equity release companies should I avoid?
We do not name firms. Instead, check any adviser is on the FCA's Financial Services Register, ask whether they are a member of the Equity Release Council, and ask for the fee and when it is payable before work starts. Be cautious of anyone who rushes you, skips the alternatives, or would rather your family stayed out of it.
Do I need a financial adviser for equity release?
Yes. The FCA requires that you receive specialist advice, from a financial adviser and a legal representative. Every client must also receive independent legal advice from their own solicitor before going ahead.
What if I talk to you and decide against it?
Then it has cost you nothing. There is no charge for the first conversation, and our advice fee is a maximum of £1,495, payable only if your case completes.
Not sure how any of this applies to your own circumstances? Craig is happy to talk it through, free and with no obligation.
Talk it through with Craig
If you want an honest view of your own situation, including whether equity release is the wrong answer, that is a conversation.
Book a call with Craig or call 0113 403 5584.
