Taking an Equity Release plan is a significant financial decision, and like all important decisions, it requires careful planning and consideration. If you’re exploring this option, here’s a practical guide to help you prepare for an Equity Release plan, tailored to ensure that you’re making informed choices every step of the way.
Preparing for Equity Release: the first step
Assess your finances
First, take a clear-eyed look at your finances. Understand your reasons for thinking about Equity Release — whether it’s for a much-needed holiday, home renovations, or any number of goals that are important to you. Before you chat with the experts, jot down your income, expenses, savings, and any debts. How might these change down the line? Especially if retirement is on the horizon, calculate your expected pension to help gauge the amount you’ll need and the timing of taking it—whether in one go or in smaller chunks.
Check your benefits
Before leaping into Equity Release, ensure you’re not missing out on any entitled benefits like pension credit. Remember, grabbing a lump sum from your home’s value might affect these benefits, so weigh this carefully against your need for immediate cash.
Clarify your goals
Be clear about what you want to achieve. If it’s about settling loans, watch out for early repayment fees. And for those big home projects, budget wisely—costs have a way of stretching beyond initial estimates. Equity Release also offers a chance to re-evaluate your financial goals. Many find they wish they’d released more funds for unexpected needs. If you pick a flexible plan, you can draw extra cash as needed.
Family matters
Discussing your plans with family is your choice, but it’s usually a good idea. After all the decisions you make about Equity Release will affect their inheritance and the responsibilities they may inherit later on. Open conversations can be tough, but they can also bring new perspectives that could guide you to a decision that fits your current situation even better.
Family input can sometimes lead to entirely different and more suitable options for your needs. Advisers often encourage family discussions and welcome your loved ones to join consultations, provided you give permission. Remember you are the client and no one can discuss your personal affairs with others, including close family, without your express say so.
Seek independent advice
There are a number of Equity Release providers, each offering different products. When you are ready to take things to the next level, seek “whole of market” advice from an adviser who can consider all available options. This means they can present you with a range of products, including some exclusive to independent advisors.
Avoid advisors limited to a small panel of providers or those representing a single firm, as this can limit your choices. To find a qualified and experienced advisor, start with the Equity Release Council’s website for a list of registered professionals.
By following these steps, you’ll be better equipped to make the most of your property’s value through Equity Release, while also considering the long-term impact of your choices.
