If you need to release equity from your property

Why are you looking to release equity out of your property?

Why? That is the question, the most important one. Not how? Or how much? Or any of the technical aspects but the ‘why?’

The reason is that too many people see the adverts from the Equity Release people and think how nice it would be to have some extra funds or to free up that stored up value in their property and proceed to enquire about Equity Release.

The problem with this is that the Equity Release companies facilitate Equity Release, they are not typically full-blown advisers who will look at the bigger picture, therefore whilst they must check that Equity Release is suitable for you and take some form of wider view ultimately their job is to produce an Equity Release solution,

However, is that the most suitable solution? That is typically best answered only by referencing the ‘why?’ question.

Equity Release is normally an option for people looking to change their financial structure to release additional funds. It is sometimes the only viable option, but it is often one of several options. Incidentally, when it is one of several options, those options may not be exclusive of each other, there could be scenarios where those options can be worked together.

It is crucial, and this applies to just about any financial planning requirement, to fit the product into the solution.  In this case the product is an Equity Release lifetime mortgage. Dangers of getting the wrong outcome are heightened when the product leads the solution.

For example, if you need to reorganise your finances in later life, don’t start with exploring Equity Release, start with exploring all options.

If Equity Release is either the suitable product to meet your requirement or part of a packaged solution which involves combining with other options, then the lender to use still remains only one factor. It is likely that an overview will need to be taken which will consider Wills, Power of Attorney, care fees provision and family wishes. How these are factored in could affect the decision as to which lender is most suitable as terms and conditions may vary from lender to lender. And the Company which has the highest amount available to borrow or the lowest interest rates may not have the most flexible or suitable terms in other respects.

The point that falls out from all of this is that the Equity Release exploration is rarely about which lender or scheme is ‘best’, because that decision can only really be made with any confidence once the whole picture of your circumstances and requirements is taken into account. An Equity Release lender or their representative, unless they are an independent financial adviser who can look at the complete picture with you, is going to be hand-tied in this regard.

Getting advice from an IFA can make a big difference and is likely in the majority of cases to be a better way of dealing with any exploration of Equity Release.