What does Martin Lewis think of equity release in 2024?

Calendar icon23rd Jan 2024 List iconEquity release

Martin Lewis thinks equity release may be right for some homeowners over 55 who want to access extra cash, but only after all the alternative options have been ruled out as equity release may have long-term implications. 

On his website, the Money Saving Expert, Martin Lewis takes care to explain how to release equity from your home with either a lifetime mortgage or a home reversion plan, highlighting how important it is to consider the alternatives to equity release, the impact releasing equity can have on any inheritance you leave and the recent rises in interest rates. He also gives some helpful tips on equity release, which I cover later, but in summary:

  1. It's best start small and take more cash when you need it
  2. You should only choose a plan from an Equity Release Council member
  3. You must speak to a qualified financial adviser first
  4. Be aware that releasing equity could affect your benefits
  5. Ensure you are getting the best deal
  6. Don't make this decision alone - make sure your loved ones are involved

 

The Money Saving Expert has also published a comprehensive guide to switching lifetime mortgage to help existing equity release mortgage customers save money. I'm pleased to see that this guide has also been fact-checked by the Equity Release Council and updated in August 2024.

 

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What does Martin Lewis say about equity release?

Martin Lewis highlights the two ways homeowners over the age of 55 can release equity from their home - with a lifetime mortgage or home reversion plan. He also looks at equity release costs, including application and arrangement fees, average interest rates and examples of repayment costs.

The Money Saving Expert's guide also focuses on the inevitable impact equity release has on inheritance, as a consequence of the loan usually being repaid from the sale of your property when you die or move into long-term care.

Despite this, Martin Lewis believes equity release may be worth considering if you're struggling financially and have money tied up in your property, as long as you aren't precious about leaving the equity in your home as an inheritance. It is, after all, your hard-earned cash.

Does Martin Lewis recommend equity release?

Martin Lewis does not explicitly recommend equity release but does say that, in certain circumstances, it may be a good way to access money tied up in your home to help you enjoy a more comfortable retirement. Whether it's right for you though will depend on your personal and financial circumstances.

On the flip side, he warns that it can be expensive and rightly reinforces the point that equity release is not a decision to be taken lightly. He recommends anyone thinking about equity release should consider all the options and alternatives carefully first.

For example, downsizing your home is one alternative to equity release that could give you the money you need. If this is a viable option for you, Martin Lewis suggests you should ideally downsize sooner rather than later as, in his experience, the older you are the less likely you are to move.

Also, if downsizing means a location change that could leave you feeling isolated, or it means extortionate moving costs that could negate the cost-benefit of moving, equity release may be more suitable.

Ashley Shepherd Our founder and managing director has over 30 years’ experience in financial services including equity release.

Our equity release expert’s view on downsizing
 
"I agree with Martin Lewis on downsizing. He’s right to highlight it as an alternative to equity release, as moving to a smaller property allows you to release the money tied up in the value of your home without having to sell a share in it or pay compound interest on an equity release mortgage. However, in my view, there are two important considerations that he doesn’t allude to, namely, property values and the costs of downsizing.
 
When it comes to value, there’s a good chance your property’s worth considerably more than you paid for it - especially if you bought it a long time ago. Put it this way, according to ONS house price data the average house price for a first time buyer in 1986 was £27,000, by 2021 it was £242,000. That could mean you’ve built up a lot of equity, even if you haven’t quite paid off the mortgage.
 
Then there are the financial costs of moving along with the emotional costs of severing ties with a much-loved home. Which?, for instance, puts the typical cost of moving house at nearly £12,000, based on the average house price in the UK once you factor in stamp duty, legal fees, removals, and so on.
 
Still, what’s right for you will depend on your particular financial situation, any dependents, and also how you feel about your home. Before deciding whether to stay or go, talk through all your options with a qualified adviser as well as trusted family members".
 
 

What are Martin Lewis' tips on equity release?

As well as considering the alternatives and the impact equity release has on inheritance, Martin Lewis offers these six tips for anyone looking to release equity from their home:

  1. Don’t borrow the full amount in one go, only what you need - a drawdown lifetime mortgage gives you the flexibility to access your money as and when you need it. You only pay interest on the money you borrow, not on the funds held in reserve, which reduces the size of the loan.
  2. Ensure your lender is a member of the Equity Release Council so you're protected by its safeguards. The Equity Release Council 'represents the equity release sector and exists to promote high standards of conduct and practice in the provision of an advice on equity release'. Importantly, ERC members must guarantee you'll never owe more than the value of your property.
  3. Get independent financial advice to ensure you make the right decision before releasing equity. Use the services of either an independent mortgage adviser or financial adviser with an equity release qualification. 
  4. Check it won’t impact any benefits you currently receive, such as pension or universal credits. Your adviser should be able to help you with this.
  5. Existing lifetime mortgage customers may be able to switch to a better deal. If you took out a lifetime mortgage some years ago, you might be able to switch to a better deal. Take a look at the latest interest rate deals from some of the UK's leading equity release providers to see how they compare to what you're paying now. 
  6. Involve loved ones in the decision-making process so they understand the implications for you and them.

 

Who is Martin Lewis, the Money Saving Expert?

Martin Lewis CBE is the founder of the Money Saving Expert and is now Chairman of the board. MSE is the UK's biggest consumer website with over 16 million users. In September 2012, the site joined the MoneySupermarket Group but firmly maintained its independence and ethical stance of putting the consumer first.

Through his stewardship of the Money Saving Expert, his consumer journalism, primetime show on ITV - The Martin Lewis Money Show, one of the most watched current affairs programmes in the UK - and frequent appearances on the news, Martin Lewis is well-known for putting people before big business and this has won him a loyal following. In 2023 Martin Lewis became a regular host of ITV's Good Morning Britain.

 

Why does Martin Lewis' opinion of equity release matter?

For many people, Martin Lewis' view on equity release will matter because he's known for championing consumer rights and lobbying the powers that be to help people save money and make more informed financial choices. You can get some valuable money-saving tips from The Martin Lewis Podcast or the Money Saving Expert YouTube channel.

Also, Martin Lewis isn't tied to any company and is committed to impartiality, but do remember his views are only his views. Before committing to any equity release scheme or provider, it's important to speak to a qualified and independent equity release adviser.

 

What else should you know about equity release?

While it’s helpful to know what Martin Lewis thinks about equity release, it's also important that you understand the product too. Independent information on equity release is available from the Equity Release Council and the Money Advice Service. Our experts have also written useful guides explaining the benefits and risks of equity release in more detail. 

 

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