Should you get a say before your parents use equity release?

Equity release loans are a way for homeowners over 55 to unlock some of the value in their home without having to move out. The money is typically repaid when you die or move into long-term care, so should relatives who stand to inherit get a say? We seek opposing views.
Baroness Altmann, a former pensions minister and campaignerEquity release can seem tempting, like having one’s cake and eating some too. It allows you to access funds from your own home, while still living in it, giving you extra financial flexibility in later life and freeing up money to pass on to the next generation.
But don’t be pressured by your children into something that you will really regret later on. Anyone considering equity release should consult an independent expert for a more dispassionate view, making sure that they are not a salesperson heavily incentivised for selling equity release to you.
There are other options. If you need more capital, you could downsize, which has tax advantages, or use other savings such as Isas. For more income, you could rent out spare rooms, rather than turning to equity release. The finality of equity release, especially if you are still relatively young, is vital to consider.
Your children may have different interests from your own, and from each other, so I believe this decision should be your own choice. Giving them a say may cause family disagreements or pressure you into making the wrong choice.
One child may want money immediately for a house deposit or education fees, while others may not need financial help and want you to keep the house value intact, to inherit more later. They certainly will not get the full market value of your home if you have taken an equity release loan.
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Many people underestimate their lifespan and take equity release as soon as they can, failing to recognise that compounding the interest on a 5 per cent loan will mean that the amount you need to repay will double every 15 years or so. It could ultimately leave you with nothing to pass on, or prevent you from being able to afford to buy somewhere smaller.
Think about your future needs. Releasing equity could mean you having to pay for your own care in later life. At the moment the value of any home you and your partner live in is ignored in the care means-test, if one party needs to move into a care home.
Of course, you want a good relationship with your children, but I do not think this should extend to a major financial decision like this. It should be your choice how much money you want to spend or give away during your later years.
• The pros and cons of equity release
Jim Boyd, the chief executive of the Equity Release Council Anyone interested in releasing equity from their homes should have a transparent conversation with their family. Involving anyone who might have an interest in the estate in the discussion helps to avoid crossed wires and confusion later on.
A decision that affects inheritance plans might be distressing to discover after the event; the same decision might be far better understood if the rationale and drivers underpinning it were discussed upfront. Death and money are such emotional topics and we do hear of children who are angry and upset to discover that their parents used an equity release loan before their death — this scenario can be avoided if the children were involved in the process in the first place.
Equity release helps homeowners who are asset-rich but cash-poor to use their property wealth in later life to support themselves or their families.
For the right person, it can be a critical lifeline, particularly for women who typically live longer and have smaller pensions than men. It can help to boost pension income, consolidate debts, adapt or renovate a home, or pay for domiciliary care.
With the average new equity release customer in their late sixties, those who have children with established families of their own will often be anxious and eager to have conversations about downsizing and care needs. It is extremely helpful for children to play an active role in discussions as plans are made to support elderly parents. Many people prefer to live independently for as long as they can comfortably do so, but this often involves proactive decisions.
In many cases, releasing equity is a selfless act because the money is passed on to younger generations to help them with their own key milestones, including buying a home.
Social attitudes need to catch up with the new realities of retirement in the 21st century, and the older generation deserves understanding and empathy for the decisions they face.
Conversations within families can build bridges between generations and reduce the chance of motives being misunderstood. The worst possible outcome would be if people don’t feel they can engage in this process at all, and so overlook the option of equity release and live a life without heating or eating as a result.