Advantages and disadvantages

At Bower we value honesty, so will always be transparent about the advantages and disadvantages of equity release.

To ensure your client has all the information they need to make an informed decision, here are some of the benefits and drawbacks to consider:

Advantages of equity release

  • Your client can unlock the money they need to enjoy a happier retirement without having to sell or downsize.
  • Clients can continue to live in their own home for the rest of their life, or until they move into long-term care.
  • They will be protected by the ‘no-negative equity guarantee’ which means they will never owe more than the value of their home.
  • The money can be used in any way they choose; some popular uses for equity release include making home improvements and paying off the mortgage.
  • With some plans, clients can make regular voluntary interest payments to reduce the total loan amount when the plan comes to an end.
  • Equity release can be a lifeline for clients stuck on interest-only mortgages with no other means of repaying it.

Disadvantages of equity release

  • By its very nature, equity release will reduce the value of your client’s estate and reduce the amount of inheritance they will be able to leave to loved ones.
  • Your client’s entitlement to certain state benefits may be affected.
  • There may be financial penalties to consider if they wish to repay the loan plus interest early.
  • The total loan amount can grow quite quickly as the interest rolls up on a compound basis (unless an interest payment plan is selected and payments are maintained).