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Is Releasing Equity a Good Idea?

Recently, there's been a lot on TV and social media about equity release, if you're considering using equity release to free up some cash from your property, you're likely wondering whether it's a good idea.

Before we tackle that question, let’s first be sure of what we're talking about.

The term equity release is used most often to describe a situation where people over a certain age free up some of the wealth they have locked up in their home by borrowing under a lifetime mortgage.

The loan doesn't need to be repaid until the last borrower either dies or moves into full-time care. Interest can either be paid, part paid or allowed to roll-up into the total amount repayable. The money you receive is tax-free but could have an impact on tax and benefits depending on your personal circumstances.

Is equity release a good idea for you?

Equity release can be a great way of raising money to clear an interest-only mortgage, make home improvements, supplement retirement income or help out family members.

You should check first whether you're elgible for other help like state benefits (have a look at or local authority grants. Also, you should make sure releasing equity won't affect any benefits you currently receive. But, if you have no other way to lay your hands on the money you need, equity release is a reasonable option.

If you are reasonably comfortable but are happy to make use of some of the wealth tied up in your home, equity release might still be useful.

The bank of mum and dad, and the lesser mentioned but equally helpful bank of Gran and Grandad, are great institutions.

You can use equity release to help family members buy their first home, pay off debts such as student loans, or if you just want to make an outright gift as a form of early inheritance. Many people are opting for equity release because they want to be around to see the benefit they can bring to their loved ones through early inheritance.

If there is nobody particularly to inherit your estate, you might decide to improve your lifestyle by taking a lifetime mortgage to make home improvements or travel while you are still fit and healthy. This might also help manage your inheritance tax liability.

There are lots of positive reasons for using a lifetime mortgage, but you also need to consider possible consequences. Equity release will reduce the size of your estate and effect the amounts you can leave in your will and some people will find this a problem.

If you take money out too early, there may not be enough equity left if you need additional funds further down the line. For some, having spent many years struggling to pay off their mortgage and own their home outright, equity release seems wrong.

You don’t have to make this decision on your own. We have experts on hand to talk you through your options and whether equity release is right for you.

There is no cost or obligation for an initial chat and you might find it really useful. To talk to a member of our team, just call 01823 286 271.

HQ Mortgage & Finance Ltd is a registered member of the Equity Release Council.