Equity Release- Would you support your parents in looking at equity release?

If your parents are over 55 and looking at their available finances as they approach retirement, they may consider equity release. But as their children, do you fully understand what that means, and do they?

While Equity Release is a suitable solution for some, it may not be for all and a qualified adviser will talk to clients about other options available before pursuing equity release.

This may include:

• Downsizing
• Applying for means tested benefits such as pension credit or council tax reductions
• Selling and moving into rented accommodation

Equity release has disproven a lot of the stigmas attached over the years, but many still have reservations based on misconceptions. For example, your parents may be worried about leaving you and other beneficiaries an inheritance and having that ability stalled by releasing equity from their property.

While the equity release and interest would be settled on death or admittance to long-term care, many products offer an inheritance protection feature where your parents could retain a percentage to ensure an inheritance could still be received by their loved ones.

Another concern is that they could end up owing more than they borrow when the interest accrued is also added. However, it should be noted that equity release products are highly regulated by the Financial Conduct Authority (FCA) and enforced by the Equity Release Council is the ‘no negative equity guarantee’ where this product won’t end up costing the client more than they have available upon sale of the property.

Many equity release advisers would encourage their clients to invite their children and/or other beneficiaries to their equity release appointments and meetings to fully understand the products on offer and the implications for their parents too. While this is a product that could benefit them and their finances, it is important to arrange discussions with a qualified adviser who can recommend the best options available.

If you think equity release could be an option for your parents, encourage them to get in touch with us for a no obligation conversation.

 

This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.