What Are The Risks?

Equity release is not suitable for everybody!
Equity release schemes can be a great way of releasing funds from the value of your home but they are not suitable for everyone. It is vitally important to understand the risks and to appreciate the cost, the level of flexibility (for instance if you wish to move home) and also the potential effect on future state benefits.

For further information the FSA (Financial Services Authority) has produced a Guide to Equity Release which outlines things to bear in mind. Some of the things to consider are:

Does the scheme have a negative equity guarantee? This means that if the value of your property decreases any outstanding debt after the sale of your house will not be passed onto your beneficiaries.
Does the equity release provider allow you to move home?
Who has the continuing responsibility for maintenance of the property?
Do you understand the terms and conditions of leases for home reversion and in what circumstances could you lose your home?
If you are using the funds to reduce potential inheritance tax and do not survive for 7 years or IHT rules change the scheme you have set up may not be effective.
The FSA Guide goes into more depth and you should study their guide fully as our list above does not cover all the risks you may face and it is essential to obtain advice. It is also important to discuss any advice you are given with a solicitor who will also carry out the necessary conveyancing work.