The main drawback of releasing capital is the possibility of getting more money out of it than you need. Perhaps one of the most important attractions is the fact that lenders offer a non-negative capital guarantee. This means that those who borrow against the value of their home will never owe more than the total amount of the property. Many see non-negative capital as a major advantage of the Equity Release program.
However, virtually all lenders give this guarantee, even if the ERC does not back them up. What are the disadvantages of releasing capital? The biggest fear that some people have is that they will end up owing the supplier more money in interest payments than the sum of the sale of their home. One of the most important pitfalls of freeing up capital is taking more money than you need. Use an Accredited Provider Make sure that the supplier you use belongs to the Equity Release Council, so that you are protected from hazards such as negative capital.
To avoid any of the potential dangers of releasing capital, you should obtain advice from an independent financial advisor who is licensed and regulated by the Financial Conduct Authority (FCA). Age Space has consulted with Equity Release experts Laterlivingnow to create this page on 5 of the most common Equity Release mistakes and the steps you can take to avoid them. While there are advantages and disadvantages of freeing up capital, the disadvantages can be overcome if you understand the pitfalls. Below, we've taken the time to detail the pitfalls of capital release plans, so you can make an informed financial decision.
You should consider freeing up capital, given the difficulties, because, with the right advice and support, it can still be a fantastic way to help you unlock a financially free retirement.