Equity release: should you take money out of your home?

Tapping your home for cash via equity release has never been cheaper or easier. But there are pitfalls – so is it right for you?

Model house on a pile of cash
Take specialist advice before committing to equity release
(Image credit: © Getty Images/iStockphoto)

More than 40,000 people took out equity-release plans last year, cashing in on almost £4bn of value locked up in their homes. The figures, just published by the Equity Release Council, underline the ongoing popularity of equity-release plans with older people looking to supplement their income in retirement, or to find a cash sum for purposes such as paying off debt or a home refurbishment.

Financial advisers have traditionally been sceptical about equity release, pointing out that the plans are often expensive, and that they reduce the size of any inheritance left over for children. But while selling up and downsizing is still likely to be a more economic route to unlocking value from your home, assuming it is practical, fierce competition in the equity-release market is paying off for potential customers.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.