For adults of pensionable age, there are many ways in which to provide themselves with an extra income to help support their retirement years, and one of these ways is through equity release. The term equity release applies to homeowners who use their homes to generate a continuous income or lump sum, whilst continuing to live in their existing home.

As with all financial issues, it is important to seek independent legal advice before considering an equity release plan. But, to help out, we have outlined a few of the key pros and cons to help decide whether equity release is a suitable or viable solution to generating extra income.

The obvious benefits to equity release include that it is a perfect solution to help homeowners of pensionable age to get their hands on a regular income or lump sum. One of the other main advantages of taking out an equity release plan is that the homeowner is able to carry on living in their existing home for the rest of their life. Should the homeowner wish to move later on, some equity release plans also allow this although be sure to check if this is something you think you will want to do.

Disadvantages of equity release include the obvious reduction of the house/estate value, meaning the beneficiaries will receive a lower sum after death. Also, equity release means selling or borrowing against your home, and may work out more expensive long-term, so it is worth considering all options before taking out an equity release plan.

However, the clear advantages of equity release mean that, for many homeowners, it is a viable way in which to enhance retirement finances. It is also a popular alternative to downsizing to a cheaper home, meaning not only would the homeowner have extra income to lead a comfortable lifestyle, they also avoid the stress of having to moving home.

For further equity release advice, you should always seek the assistance of an Independent Financial Advisor.

Related Blogs