There are a number of risk considerations that need to be taken into account. It is important that you are aware of these.
- Most schemes do not allow you to pay off the loan early without penalties
- If you take out an equity release plan too early in life, you may not have enough value left in your home to move to another property later on.
- You may experience problems if you decide to move. Although the majority of lenders allow you to move from one property to another, moving may be difficult if the new property is more expensive than the equity remaining in your current home.
- Some properties are not accepted by lenders i.e. sheltered housing, as these are typically hard to sell.
- Using equity in your home will affect the amount you are able to leave as an inheritance.
- Any means tested state benefits (both current and future) may be affected by any equity released.
- Taking out an equity release scheme will affect you in the short and long term. You need to be sure you are happy with the scheme now and that it will suit your objectives now and in the future as far as you are able to judge.
- Most schemes do not allow you to pay off the loan early. If you decide to repay the loan early, the majority of lenders apply an early repayment charge. Charges for valuation, administration, advice, and legal fees may apply.
- Your home may be repossessed if you fail to abide by the terms of the contract as detailed within the mortgage offer.
- Typically, any outstanding mortgage(s) will need to be fully repaid before entering into an equity release contract.
- If any relevant information provided has not been disclosed accurately and honestly, this could result in any offer made, becoming invalid.
- Failure to disclose any requested or relevant information may adversely affect any offer made.
- It is important that you fully read and understand the terms and conditions of the mortgage prior to going ahead.
- Specialist lenders’ products tend to be less competitive than those generally available.
- Equity release can be more expensive when compared to an ordinary residential mortgage.
