Equity release is a strange concept. You 'mortgage' or 'sell' your house, but then you just seem to get money without having to do anything else. Because it's so strange, people may be reluctant to jump in, but new research shows that a lot of this reluctance is based on misconceptions.
Retirement Advantage have conducted a nationwide survey asking about equity release, and found that the most popular reason people gave for not using equity release, cited by 24%, was that they didn't want to lose control of their property. This was followed by 16% who said they would not consider equity release because they want to pass their property on as inheritance.
With any legitimate equity release product, you regain control of your property – and with the exception of a home reversion scheme you also retain ownership – and may even be able to move if you decide you'd rather live somewhere else. While there will be some terms to abide by, no equity release provider will drop by your house to check you haven't painted the walls bright pink.
Likewise, equity release does not mean you won't be able to pass on any inheritance. In fact, there are special provisions as part of an equity release contract that allow you to state exactly how much of the property value you want to set aside for an inheritance. And of course you'd be able to use the money released from the house to help your children with an early inheritance – so they can also own a home, for instance.
Given that 64% want to remain in their property after they retire (up from 59% in 2017), the misconceptions surrounding equity release could be holding a lot of people back from talking to a professional. This is a shame, as the extra money could provide a much-needed boost to one's retirement income, or the funds for some necessary renovations.
Alice Watson, head of Product and Marketing at Retirement Advantage, also warns that "These simple misunderstandings around equity release threaten to deny people a potentially valuable source of retirement income. With pensions and other savings unlikely to meet retirement income aspirations, there is a need for more people to get used to exploring property to help them reach their desired standard of living."
Equity release certainly isn't for everyone. However, there's no harm in talking to a professional about it to see if it could be for you. Have a look at our equity release page to find deals and answers to the most commonly asked questions
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.