Downsizing versus equity release…
When it comes to funding retirement, people often turn to their largest asset, the family home. They can choose between downsizing to a smaller, more manageable property and enjoying the equity, or using an equity release loan scheme. These are ways to release cash from your home without having to move.
This is, of course, a big decision to make, especially as the latter can diminish any inheritance you may be planning to leave in your estate.
The cost of equity release schemes has increased significantly in recent months. In fact, according to a recent report in The Times (15 October 2022), the average interest rate on these loans is 7.54 per cent (up from 4.18 per cent in January 2022), meaning that any debt would double every nine and a half years!* As well as diminishing the value of your estate, equity release schemes can also affect any benefits you receive or become entitled to in the future.