The Care Options at Retirement report labels equity release as a “last resort”.
It claims equity release is “very expensive, inflexible and leaves people with little or no equity in their home”.
It says the products can leave pensioners unable to go into sheltered accommodation or a retirement home due to a lack of collateral.
The Which? report also says taking up an equity release product could affect someone’s chances of claiming benefits.
Home & Capital managing director Nigel Hare-Scott says: “This portrayal is outdated, misleading and unfair. It is a pity the guide does not focus on ways of addressing consumer needs. Instead, it will steer elderly people towards interest-only mortgages or sale and rentback schemes which are both potentially extremely dangerous alternatives.”
Safe Home Income Plans director general Andrea Rozario says: “It seems to me that Which? has a very outdated view on equity release and has not taken into consideration the market advancements of the past decade, let alone the last 12 months. Equity release is a logical consideration for those looking at how to fund their retirement. It offers a guarantee that older people can stay in the homes they know and love, with no monthly rent and a no negative equity guarantee.”
Co-author of the study Philip Spiers says: “Equity release might seem like the solution for any pensioners struggling to make ends meet. However, if circumstances change, you might not have enough money remaining to fund alternative accommodation.
“Anyone considering equity release should do so cautiously and only after exhausting other options.”