Equity Release: How Good or Bad is It?

by Richard Jeffcock of the Equity Release Partnership

I still hear people saying that equity release is a terrible option. When I dig deeper, I discover they are basing their incorrect assumptions on the bad press equity release received years ago.

Modern equity release is subject to strict regulations. The products now available are excellent and incredibly flexible.

Fixed interest rates – No hidden surprises

Interest rates are at an all-time low and can be fixed for the full term. This means equity release can be a cost-effective way in raising tax free cash for any purpose you desire.

If I take Equity Release, there will be nothing left for my family

A big reason more and more people are taking equity release is to give early gifts to loved ones. Whether it’s for a property purchase, or to help them through a sticky patch. It is also becoming common to release equity for inheritance tax planning. However, equity release can be used for anything – from new cars, to holidays, to home improvements and investments.

An example of the equity in a property before and after releasing tax free cash:

House prices have increased on average by 2.9% per year since 1973, and at a higher rate since 1990, so the 2% per annum increase assumed below is potentially conservative. Obviously house prices can go up and down. You can get an appreciation of this by looking at the change in your property’s value over the last 20 years.

Property value at commencement: £350,000

Property value after 15 years using 2% compound growth each year = £461,000

Amount of equity released: £100,000 (fixed at 3.75% interest per year in this example)

Equity Release repayment value after 15 years = £167,500 

Equity in property at start of loan = £250,000 (£350,000 – £100,000)

Equity in property after 15 years = £293,500 (£461,000 – £167,500)

It’s surprising to note the amount of equity in your property at the start of the loan is lower than the amount after 15 years. It is also important to note you would have had the benefit of enjoying the £100,000.

You can make optional repayments

Most plans offer optional repayments. It is therefore potentially possible to reduce the outstanding loan and/or repay it in full at an early date.

More about me

I am an equity release expert with access to the entire market. I serve the Cotswolds and surrounding areas. I focus on putting your needs first.

I offer a free, friendly discussion. If you then decide you want to take things further, the process can be completed in person, over the phone or by video chat.  Any advice I give throughout is free, and my fee of £995 only becomes payable if equity is released from your home.

Please call me on 07809 462165 or 01793 272082 or email: equityreleasepartnership@gmail.com

Please keep this article for future reference.

Website: www.equityreleasepartnership.org

Jan –  my LOGO (to go at right side of the page) – If you can also put the picture you have of me as per the previous double page editorial, that would be great

Jan, the following is in small print to go at the bottom of the editorial

HTIA Ltd t/as the Equity Release Partnership. 175 Queensfield, Swindon, SN2 7SU. Authorised by the Financial Conduct Authority (number 776953).