Equity release schemes can be advantageous for many people, however, entering into an agreement concerning your home, which may be your only asset, is a big step and the schemes are not beneficial for everyone. It is sensible to think long and hard about the issue and seek advice from financial experts and family members.
What should I ask before I sign up?
Before an agreement is made you need to discover what the policy entails and how it will affect you and your family in the short and long-term. You will need to consider your age and life expectancy since, if you enter into a release scheme and you only live a short period of time, you will receive less than the value of your home.
If you are receiving benefits or payments towards the cost of care, this can be affected by income from equity release. If you receive money from an equity release plan this may affect your eligibility and you may not be able to claim your benefits. You should find out whether this will affect you before you put your name down on paper.
Check with the provider that you are able to move house if needs be, as when you get older you may want to move closer to relatives, down-size or move into residential care or sheltered flats, for example.
Where can I find out more or get advice?
Equity release is sometimes difficult to get your head around and it can be hard to decide whether or not it would be a good idea. Because of this it is advisable to see a financial adviser and discuss your individual needs. It is also advisable to explore the market to see which plans are out there and your financial adviser should be able to recommend the best policies according to your individual circumstances. Always ensure that you choose a reputable company which is approved and properly regulated. You can find an approved financial adviser by visiting the Financial Services Authority website. Always make sure the adviser has experience and the relevant qualifications in equity release.
It is imperative to be aware of this situation in the occurrence of you passing away. Most companies require the beneficiaries of the will to sell the property in order to repay the loan and this means that family members may inherit less than they anticipate. It is therefore a good idea to communicate with your relatives about this before you go ahead with an equity release scheme. If you do decide to partake in a scheme make it clear to your family members that the proceeds of the sale of the house will be used to repay the loan, rather than being given to them in the event of you passing away.