If you’ve been looking for ways to boost your income, an equity release might help you meet your financial goals.

For older property owners, an equity release is a great way to free up cash, especially during your retirement years.

Before you dive in, however, there are several things you should consider first. Here’s all you need to know before making up your mind.

What is an equity release?

An equity release is a type of mortgaging option that’s available to over-55s. It allows you to access a lump sum of money which was previously stored in your property’s value.

Generally speaking, there are two options for equity releases: a lifetime mortgage or home reversion.

The first involves taking out a mortgage secured on your property (as long as it’s your main residence) while retaining ownership.

The second involves selling all or part of your home to a home reversion provider in return for regular payments or a lump sum of money.

Why use an equity release?

Older property owners often find that they need some extra cash during retirement, and an equity release is a great way to do this.

People often use equity releases to fund home renovations, for example.

How common are equity releases?

Equity releases are relatively common in the UK.

In 2021, more than £4.8bn of equity was released in the United Kingdom, with more than 300,000 households having used equity releases since 2011.

What are the pros?

One of the main benefits of an equity release is that it allows you access to wealth that you previously couldn’t use.

With house prices now at record highs, this can be a huge benefit to people whose wealth is tied up in property.

Once the cash is freed up, it can allow you to go ahead with purchases or projects you couldn’t otherwise, or allow you to have a better quality of life in general.

Equity releases also allow you access to funds without having to leave your home, which is often appealing to older property owners.

What are the cons?

One of the cons of using an equity release is that it could decrease the amount of wealth passed along to your family in the future.

If the equity release isn’t handled correctly, it could also leave your family responsible for repaying it with your assets.

An equity release can also be more expensive than an ordinary mortgage, with lifetime mortgages normally carrying higher rates of interest.

Weigh up the pros and cons alongside each other, and you’ll put yourself in good stead for making the decision that suits you best.