Top 10 equity release tips

1. Seek out the cheapest advice providers

Most equity release companies charge between £500 and £2,000 for advice. Make sure to shop around for the cheapest ones.

2. Think about all the other solutions open to you

Releasing equity from your home is a huge choice and should not be taken lightly. By considering your options you may eliminate your need to borrow, or reduce the amount you need to borrow.

Any reduction in the amount you release could largely reduce the long-term cost of the plan. This allows you to get better deals with more flexibility.

The most common alternatives are:

• Downsizing - selling and moving to a cheaper property
• Borrowing from family or friends
• Using existing savings or investments
• Claiming all available welfare benefits, such as pension credit
• Home improvement grants

3. Only borrow what you need

Make a detailed list of your immediate spending plans. You do not want to pay interest on money you don't need.

You may expect to need more money in the future. 'Flexible drawdown' plans can provide access to extra funds when needed.

This means interest is only charged on the money you have borrowed. Borrowing money over time can be far more cost effective than taking a single initial cash lump sum.

4. Think about the interest charges

If you can afford the payments, the best way to manage the cost is to pay the interest monthly, or an annual (yearly) basis.

Many plans will allow you to manage the interest by monthly repayments or overpayments.

If you cannot afford the full interest payment, you can still reduce the cost. You can do this by making partial repayments, or overpayments.

5. Do not judge a plan on the interest rate

A competitive interest rate is important. But you should also think about how your plan will meet your future needs.

Some of the questions to ask when choosing a plan are:

• Can the plan be repaid early?
• Are there any early repayment charges?
• Can you borrow additional funds in the future?
• What costs would be involved?
• Can the plan be moved to another property?
• Who will own the property?
• Is the plan regulated by the Financial Conduct Authority?
• Does the plan meet the standards set by the Equity Release Council?

Any plan you choose must meet your immediate needs and be flexible enough to adapt to any life changes.

6. Involve family members or a trusted friend

You do not have to do this, but we recommend you discuss your plans with family.

If you decide not to involve them, you may wish to let them know that any future inheritance will either be reduced or eliminated.

If you do not involve family members then we suggest talking about your plans with a trusted friend.

It is also good to inform the executors of your estate. They may have to deal with the equity release provider when the house is sold.

7. Do not proceed without impartial financial advice

Seek advice from a qualified and experienced advisor. They will have access to all the plans and plan providers in the market. This will make sure that all options are considered.

8. Choose an experienced solicitor

All Equity Release Council-approved providers require you to seek independent legal advice.

Make sure your chosen solicitor has equity release experience. Ideally you should agree to a fixed legal fee before going ahead.

Your advisor will be happy to help you find a solicitor.

9. Think carefully before borrowing money to invest

Always make sure you seek specialist advice. Bear in mind that the value of investments can go down as well as up.

10. Think about the impact any borrowing may have on your entitlement to means tested benefits

Having savings in the bank that you do not need could affect your eligibility for benefits.

Ask your advisor for a full benefits assessment. This is to:

• Make sure you are already getting the maximum amounts available
• Measure what impact any borrowing may have on your current and future entitlement