Is equity release a safe option?

Equity release has become highly popular in recent years. Those over the age of 55 can use equity release plans to free up cash from their homes to fund improvements, help out family and friends, clear outstanding debts or even purchase a home abroad.

You will be pleased to know that equity release is fully regulated by the Financial Conduct Authority. And, you can only take out an equity release plan if you have received professional financial advice.

If you use products that have been approved by the Equity Release Council there is no longer any danger of going into negative equity. The worst situation is that you will use up the whole value of the house, but if you’re given professional advice you should be able to avoid that scenario too.

It is, however, important to remember that you may not be able to rely on your property wealth later on in life if you take out an equity release plan early on. Things like downsizing, funding long-term care or passing on inheritance need to be taken into account when planning for the future.

As with any big financial decision there is always risk involved and it makes sense to get advice before committing to any specific path.

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