Home Q&A: The pros and cons of equity release loans
Before signing up for an equity release product, sometimes termed a lifetime mortgage on your home, get the advice of an independent financial specialist and talk to your solicitor too. File picture
Before signing up for an equity release product, sometimes termed a lifetime mortgage on your home, get the advice of an independent financial specialist and talk to your solicitor too.
You can release money from the value of your home without digging into existing savings or investments.
You stay in your own home and have no loans to pay off during your lifetime unless you sell the property.
The money can be used for anything, including improving the home and/or making it more suitable for you as older adults.
The money could be used to help children or friends with their property financing, releasing an expected inheritance while you’re alive in the form of a gift.
The house now has a legal charge by the lender on the title. This and any other loans/mortgages/debts must be paid off by the estate executor before any money is released to your heirs.
This type of loan will accrue compound interest, which could, over a longer period (for instance, if the loan was taken out on retirement), grow to at least match the selling price of the property.
The total owing cannot exceed it. Ireland is above the EU average ranking for longevity.
An equity release loan will seriously impact inheritance if the home is the principal asset. Get independent advice and make any lien known to those expecting a windfall on your passing.
If you take out an equity release and give it away to a family member, those funds are still counted as part of your assets (within five years of the gift) by the Fair Deal Scheme for nursing home care (7.5% of the market value for three years, or 22.5% total).
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