Can equity release be a viable source of retirement income for advised clients?

I tend not to find many people using equity release to supplement income in retirement, but I think it will become a bigger part of the industry once everything changes next year.

While it’s available, people need to be really careful with it. It is often actually for children rather than the parents themselves.

Other reasons to use equity release could be for long-term care, for people wanting care in their own home – not live-in care, but constant care during the day. It has become a normal thing to do and I have had a lot of strange cases. I have come across people getting divorced at 75, and using equity release to try to buy each other out, and another where a brother was buying his brother out after not seeing him for 30 years.

As a source of income, it can be useful. Even if you don’t call it ‘income’. It can help people going on holidays, for example. Then they can use their pensionable income to live.

Yes, equity release is a viable source of retirement income, but whether it is the best thing is another question. Sometimes it is the only thing to do, unless people want to sell their property for a lump sum and then later put the rest of the money into an annuity.

Equity release has its place. Being independent, I have to look at all other alternatives: Can you borrow the money from family? Can your children help? Can you get a government grant? Have you considered downsizing? One lady has lived in the same house for 89 years and doesn’t want to leave. She could downsize, could easily pay for care but doesn’t want to.

NO - Mark Dampier, head of research at Hargreaves Lansdown

It’s not black and white. But the most obvious reason not to use equity release is it is expensive. Given where interest rates are, they don’t seem to have come down in equity release land and therefore, you see the size of your debt has doubled in about 10 years. It is an incredibly expensive way to release money. You would be better to downsize if you could, but if you’re going to do it, you need to go in with your eyes open. House prices go up and down and in many parts, they haven’t gone up at all.

Way too many people think about it at a young age. You can start these products at about 55 to 60, but I wouldn’t consider it until 80. And what is the first thing people do? Put a conservatory on the back of their house! They’re improving the house.

If you release £100,000 today, one of the great problems with interest rates being so low is you don’t actually get that much for your income. Although they can’t take the entire house from you like the old days, it limits what you might need money for later, which might be long-term care. That’s why it should be a product you should consider much later.

If you try to move, you normally find unexpected penalties. Also, as soon as you have some capital, you’re not entitled to benefits. It’s more complicated and it comes back to the idea your house is your pension, which is completely daft for a lot of people. Unless you are lucky enough to have a house worth £4m, most people still haven’t got the sort of monies to make themselves particularly independent, and certainly not in their 50s or early 60s.