Equity release risks increase for homeowners avoiding tax
Many older homeowners are borrowing against their property to avoid inheritance tax, which will change next year. This trend has raised concerns among financial experts about the risks involved. Equity release, a type of borrowing that uses home value as collateral, has increased by nearly 7% in the past year. Homeowners unlocked £510 million in 2024 through this method. Experts warn that if the borrowed money is not gifted seven years before death, the interest costs could outweigh any inheritance tax savings. Interest rates for equity release can reach 6 to 7%, leading to significant debt.