Should you cash in on your home to enjoy a wealthier retirement?

Equity release has changed a lot over the last 10 years

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Should you cash in on your home to enjoy a wealthier retirement?

The number of equity release mortgages available to older homeowners keen to enjoy their later years using cash tied up in their homes has tripled in the last 10 years, according to new figures from the Equity Release Council.

In the last three years alone, 51 more products have been launched - meaning there is lots more choice for those keen to unlock their housing wealth.

See also: The horrible squeeze killing retirement incomes

See also: Should you give away your inheritance before you die?

Rachael Griffin, tax and financial planning expert at wealth manager Old Mutual Wealth, said: "Growth in equity release policies has surged in recent years and that momentum shows little signs of dissipating."

Interest rates have fallen as a result of the extra competition, with even average deals now charging just 5.30%.

And equity release mortgages have become a lot more flexible over recent years.

As of last month, over two thirds allowed customers to make ad-hoc repayments without incurring early repayment charges.

Many providers also now offer a "drawdown" option, which allows you to withdraw money from your home in stages, or "inheritance protection", which means you can ringfence a guaranteed minimum amount of housing wealth to leave to loved ones.

So, is it time you used the money tied up in your home to start living the life you deserve? This list of pros and cons should help you decide.

Equity release: the pros

*You can stay in your home, while enjoying the money you could get from downsizing to a smaller property.

*You don't have to pay anything upfront.

*There are no rules about how you use the money. You can book a holiday, buy a car or simply boost your everyday spending power.

*You can now choose to only release money as and when you need it - thanks to drawdown services.

Equity release: the cons

*Your loved ones will get a smaller inheritance because at least some of the value of your property has been used up - although you can now protect them to some extent using "inheritance protection".

*There may be issues with dependents or relatives living in your home as you get older. You may also find that taking equity release has an impact on the benefits you can claim.

*Equity release mortgages can eat up the full value of your home if you have them for long enough. (To protect you and your loved ones in the case of falling house prices, you should therefore look for a scheme with a "no negative equity guarantee".)

*You could miss out if house prices go up in your neighbourhood, as at least some of the gain will go to the equity release lender.

Equity release: the top deals

Currently, the lowest rate equity release mortgage offering the drawdown facility is Legal & General's Premier Flexible Lifetime Mortgage, which charges interest at a fixed rate of 3.90%.

If you go through a broker, you can also get an "interest-only" deal charging 3.53% from lenders such as Hodge Lifetime, or a "lump sum" product from Family Life starting at 3.70%.