Equity release schemes should only be used as a last resort because they can be expensive and inflexible says Consumers' Association publication Which?
A Which? report out this week says interest roll-up loans see the amount outstanding grow quickly and can eat up the value of the property, making it difficult to move.
The report also points to the higher rates for equity release, many of which stand at around 7 per cent, as a reason for caution.
Which? editor Helen Parker: “We advise people considering equity release schemes to view them as a last resort. These lifetime mortgages dont have to be paid off until you die, but while this means you dont have to worry about paying off the loan now, it can cause problems if your circumstances change, and of course youll also have less to leave behind. It is crucial that anybody considering an equity release scheme seeks independent financial advice before committing.”