Let the critics talk, and they’ll tell you that equity release (also referred to as a reverse mortgage) is a terrible thing and no pensioner should even think about it. But at the end of the day, we’re all individuals with different goals. To us, it is the height of arrogance to assume that we know better than a homeowner about anything unless we asked them directly. For the elderly homeowner that wants to improve cash flow, a reverse mortgage scheme really is a solid option.
So let’s get the pitfalls out of the way. Transparency is always good when trying to figure out whether something is viable. One of the pitfalls is that there can be fees that you might gloss over unless you read the fine print. There are new regulations in place to teach people what to expect, but if you don’t educate yourself there’s no one you can blame. When things are spelled out and people still file a complaint with the Ombudsman, it’s clear that they’re lashing out at the wrong party.
There are costs associated, but shopping around will help you reduce the cost of equity release. Keep in mind that there are also no-negative equity policies in place with some providers that would not hold the estate accountable for interest if the house does not continue to grow in value.
The best part of this scheme is that no one is forcing you to leave the home. This is the part that the critics like to ignore the most when they talk about their pitfalls. You’re basically getting to take a lump sum or an ongoing monthly payment while still enjoying the home to the fullest. Even if there is a mortgage on the home still, it’s very possible that you may still be eligible for a release scheme.
Instead of reading online opinions, contact a provider’s representative and ask them to walk you through it. If you’re worried that you’re going to be in over your head, make sure to take a friend or even one of your children with you. The worst thing that you can do is just assume that something won’t work out for your needs. Selling a home can be very stressful as well and while it comes with pitfalls, you rarely see people complaining about it. Give reverse mortgages careful consideration before you scrap the idea, and you just might be surprised at the results.