Equity release seems like a great option when you are in need of cash and are sitting on a property with a huge equity. However, equity release schemes are not right for everybody and should be opted for after careful consideration. Following are the basic positives and negatives of equity release products.
The major benefit of equity release schemes, of course, is that you can generate income against your home that is, release equity. This income can be received as a single payment or in instalments. The money received is tax free and interest is deducted when the house is sold.
Another obvious advantage is that you can continue to live in your house for the rest of your life, unless you decide to move out and sell it. No matter what the sale price of the house is, there is usually a guarantee on these schemes which ensures that you don't owe the company any more money.
The downside of this product is that often people make a hasty decision. Lowering the equity of your house by taking a loan against it is a major decision and one that concerns any beneficiaries that you may have.
The interest rates are high, so the product may work out to be much more expensive than, say, moving to a smaller house! It is important to explore all other avenues of generating cash before opting for an equity release scheme.