Is property equity release a viable option?

Is property equity release a viable option?

Is property equity release a viable option?

As the UK real estate market continues to go from strength to strength, one of the strongest in the world, many people are sitting on a significant profit on their real estate investments. There are many properties throughout the UK which have grown significantly in value over the years yet many owners are perhaps not enjoying the lifestyle which you may associate with their property assets.

A number of people are now looking towards property equity release schemes whereby they effectively remortgage or take out a loan against part of their property. There are obviously many pros and cons when looking to release equity from your property investment which we will cover below.

Affordable interest rates

It goes without saying that if you’re able to put up some kind of collateral against a loan then the terms will be more favourable than if it wasn’t secured. The exact benefits will depend upon individual situations, the amount of money required and obviously the institution which is providing the funding. Perhaps if you require funds for a specific event, repairs, loan consolidation or other situation, there is some mileage in talking to your financial advisers about a potential property equity release.

Quote from “Is it time to change UK property sale laws?”

Increased payments

While it is all good and well attracting affordable interest rates on your property equity release you need to bear in mind that these additional loan payments are on top of your general day-to-day living costs. These will obviously include various expenditure connected with your property such as council tax, etc and must be taken into consideration when looking at an equity release option. It will obviously depend on the size of the loan that you are looking to arrange and, even with collateral to back-up your loan request, some companies may well be influenced more by your short to medium term cash flow.

Death duties

The majority of families in the UK will be looking to leave their properties to children, family members and perhaps even friends. There are obviously death duties to take into consideration depending upon the size of a deceased estate. However, where you have taken out a loan against your property, it is worth bearing in mind that upon your death the loan will be called in. This may cause short-term cash flow issues for those inheriting your assets and may even lead to the property being sold to cover debts.


If you’re looking towards a property equity release to give you additional short to medium term funds you may well consider downsizing to a smaller property which, assuming the mortgage on your property is paid up, could leave you with significant additional funds. Many people are now looking to downsize as children leave the nest, perhaps larger properties become a little more demanding in later years and quite simply a smaller property may be more amenable.


Even though many people are still making significant returns on UK property assets, it is those who acquired UK properties in the 1970s and 1980s that are perhaps benefiting most. Many homeowners in the UK will have paid off their mortgage, will have a significant profit on their properties and may be looking to live a little more, require funds for specific situations or indeed be looking to downsize and take a profit. If you’re looking down this particular avenue it is imperative that you take professional financial advice to ensure the action you are taking is the best for your situation in terms of cash flow, liabilities and long-term tax planning.

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