Equity release for the under 55s

The majority of equity release schemes are available for people above 55 years of age, but there are some that take applications from younger homeowners. It is worth noting that the younger you are the less likely you are to be offered a good value loan. This is because the loan is recouped when you pass away or enter long-term care and the chance of this happening if you are under the age of 55 is slight. If you agree to a home reversion plan, which involves selling a share of your home to the provider, you will probably be offered under the marketplace value, which can sometimes be up to 80 percent lower than the recommended market price.

Is equity release a good idea for younger homeowners?

In general, equity release schemes are not advantageous for younger homeowners, because they are viewed as a long-term loan secured against the assets. Usually the money is paid back by means of the transaction of the dwelling once the owner dies or goes into long-term care. However, for younger people it may be decades before this happens and the rate offered by providers will reflect this.

There has been an increase in the number of companies offering fast-cash payments for homes, but you should be wary of these firms. If you are struggling for money but you own a home, this is a valuable asset and you shouldn't be pressured into selling it, especially since the price you get will be disproportionate to the market value. Instead see a financial adviser and talk about alternatives. You may be able to sell your home and move to a smaller house or a cheaper area, for example. It may also be possible for you to take out a loan or alter your current mortgage arrangement.

Seeking advice

It is essential to discuss your financial position with a professional, which should take place before you opt for an equity release scheme, especially if you are under the age of 55. A list of trained, approved financial advisers is available on the FSA (Financial Services Authority) website.