Some people believe that the only viable way to release equity is by downsizing and it is central for any adviser to discuss in depth with clients.It is also worth understanding the regulator’s view. An extract from MCOB (8.5.15 G) says: “In complying with MCOB 8.5.4R, a firm is not required to consider whether it would be preferable for the customer to:1. Trade down – that is release funds by selling his existing property and purchasing a less expensive property – rather than enter into a regulated lifetime mortgage contract. MCOB 8.5.4R relates to the decision as to whether a lifetime mortgage is a suitable solution for a client. Some may believe we are excused from considering this as an alternative to equity release but I think the FSA is saying in its guidance that the option to downsize should not be discussed. I believe that downsizing is more a matter of the heart. There are huge implications over downsizing. As well the financial aspects, there are also practical or emotional factors and we may never be close enough to the client to understand their rationale fully. I believe the point that the FSA is trying to make is that the client has to decide whether to downsize based on their own circumstances. Downsizing must be considered as an alternative, not just alongside equity release but also other forms of borrowing. There needs to be a common footing based on the fact that one option may not be suitable for all. We need to accept that someone who has lived in a property for many years may not want to move and that they must be allowed to make informed, educated decisions about the options available to them. There is little data to show that many people consider equity release as part of a range of options available and proceed to downsize. Many onlookers still focus on the financial aspect of the transaction, for example, by saying that downsizing must be the most economical route available to them. This is not always the case and we have to stand our ground in the debate which insists that this is always the best option. For example, Alan lives in a 245,000 property and has no emotional ties to his property. His decision to release equity is to be based purely on maths. He wants to raise 80,000 to buy a second property in Spain. He estimates he will need an additional 15,000, as well as the 80,000 to cover all costs of the move which include estate agent’s fees, stamp duty, removal costs and decorating costs – curtains and carpets. etc. He would therefore look for a property in the region of 150,000. The alternative is that he releases the funds from his current property from a lifetime mortgage. Before he can decide whether to downsize or not, he looks at the potential for property price increases or decreases in the future (see Table A). Downsizing can be a difficult decision to make. This may be one reason why the FSA has written its guidance in the way that it has. Ultimately, it can be a difficult decision to make based on maths or other issues. The main point is that cost alone may not always work out to be the right reason but this may not be known for many years.