Equity release: Homeowners taking risks by not getting advice

Homeowners considering taking out equity release without advice are being warned they could be making a costly mistake.

Homeowners considering taking out equity release without advice are being warned they could be making a costly mistake.

Moneyfacts.co.uk has uncovered evidence fewer than a quarter of people would seek out an adviser to discuss releasing equity from their home.

Almost half of the people surveyed thought they could handle taking out the product without advice, and 29% said they would not trust a financial adviser. This is despite 69% admitting they did not have a clear understanding of equity release.

Rachel Springall, finance expert at Moneyfacts said: “The idea of taking out an equity release plan has clearly crossed the minds of many consumers, but what is worrying is that most of our survey respondents felt they could go through the whole process without seeking advice.

“This could be an expensive mistake down the line if consumers choose the wrong deal.”

She added: “Anyone considering equity release would be wise to seek advice, even if they feel they know enough to make it through the process.”

“Going directly to a lender, such as through an advertising campaign, may be easy but it means customers won’t get independent comparisons that an adviser can provide.”

Inheritance concerns

For many, the research discovered, equity release simply wasn’t an option and over half of those questioned said they would not consider equity release to fund their retirement.

Indeed, more than a third of those were put off taking out equity release because they were worried about the impact it would have on the inheritance.

And 30% of people were deterred from taking out equity release by the interest rates on offer.

Springall said: “Equity release won’t be right for everyone, so it’s positive to see that most of our respondents have considered the impact on their children or dependants’ inheritance.

“However, one area that could see improvement is striking up a conversation, as almost half of those asked have not discussed the topic at all.

“It’s important that consumers take the time to carefully think about equity release and discuss it with anyone who could be affected, which is why it’s good that these responses shed a light on consumers’ attitudes toward such a plan. Thankfully, equity release is being taken seriously and is not seen as a quick fix.”