Lifetime mortgages and home reversion schemes are designed for homeowners over 60 years of age and give people the option of getting a lump sum or regular income without having to move out of their home. Consumer Director, Mary O’Dea, said, “Our research shows that almost 4 in 10 consumers aged over 50 would consider releasing equity from their homes at some point in the future. The benefit of these schemes is that they provide you with cash to meet your current needs, which is particularly appealing if you are living on a tight budget and your home is worth a lot of money now. But the risk is that you may not have enough money in the future to meet your long-term health or care needs. If you want to release some of the value of your home, consider the cost carefully and remember there are different risks than with other financial products. Any financial decisions you make at 60 can look very different when you are 75 and your needs and circumstances may have changed. Make sure to get independent legal and financial advice and consider whether you should talk over your plans with a family member.” “Think carefully about the long-term costs and risks. With a lifetime mortgage the longer the mortgage lasts the more it costs. You could end up owing over €245,000 in 15 years time on a lifetime mortgage that would give you €100,000 in cash today. This is because with this type of equity release you make no repayments until your home is sold and the interest is added to the amount you owe, so it builds up quickly and the amount you eventually owe could be close to or equal to the value of your home. If you needed money for long-term care later on, you could find that there is very little value left in your home to pay for it,” she said. She added, “Home reversion schemes involve selling part of your home for a cash price. You are not borrowing against the value of your home but are actually selling part of it to raise cash now. Typically with a home reversion scheme you will get less than the market value of the portion of the house you sell. For example if your home is worth €500,000 and you sell half of it you could get between €112,000 and €146,000 in cash rather than the €250,000 market value of a half share.” The Financial Regulator is urging anyone considering equity release products to make sure they consider the following main issues and risks: · Any lump sum or income you raise through an equity release scheme could affect your entitlement to state benefits such as your means-tested State Pension. · The money may not last for your lifetime, and its value will gradually fall due to inflation. · Consider your future financial needs and also your long-term health and care needs. · Raising cash through equity release will mean there is a lot less, or perhaps nothing at all, left for your beneficiaries. If you are concerned about this, discuss it with your family or a solicitor. · Consider how much money you really need. Money you get through an equity release scheme will lose value if it is just sitting in a low-interest bank account. If you left it as equity in your home, it could increase in value. · Consider carefully the benefits of making a will before entering one of these schemes. This will help avoid delays in sorting out your affairs after your death, and may save unnecessary extra costs. · Do you have other options for raising the cash you need? Consider whether you could rent out some rooms in your home, sell your home and buy a cheaper one or transfer ownership to a family member in return for the cash and a right to live in the property for life.