Myths of Equity Release

It is important to separate the facts from the fiction. Equity Release is a product that has been plagued by a poor reputation for many years. During those time when consumers suffered from various poor outcomes of equity release, such as negative equity on their homes, our advisers did not recommend the product. However, following significant changes to the product’s regulation, equity release has become revolutionary for many homeowners. We advise that you read our ‘Benefits of Equity Release‘ and ‘Lifetime Mortgages‘ articles.

Sadly, if you discuss the thought of pursuing equity release with friends and family, it often elicits a negative knee-jerk reaction which deters consumers from exploring the product further. We encourage you to show this article to those that are sceptical of equity release.

The following statements are Myths of Equity Release:

1) We will not be able to move home.

False. All equity release plans approved by the Equity Release Council guarantee the right to move your plan to a new property as long as the property meets lending criteria.

2) Our debt may exceed the value of the property.

False. The no negative equity guarantee, on plans approved by the Equity Release Council, means that you will never owe more than the value of your home. Therefore, excess debt will not be passed on to your beneficiaries.

3) We will no longer own our home.

False for lifetime mortgages. You will always own your home with a lifetime mortgage – the most popular type of equity release plan.

4) We will have monthly repayments.

False. You are not obliged to make monthly repayments with a lifetime mortgage. This mortgage’s interest rolls up until death of the applicants (or permanent movement into long-term care). When the plan comes to an end, the capital and rolled up interest will be repaid. Beneficiaries of the property often choose to either re-mortgage the property, perhaps on a let basis, or sell in order to redeem the equity release plan. There are some plans available that allow partial capital or interest payments to be made should you wish.

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For further information on equity release, please click the ‘Contact Us’ button and submit an Equity Release enquiry form. Our advisers would be happy to arrange a free consultation to discuss your requirements in depth.

This article is intended to provide a general understanding of the topic. The contents should not be treated as advice. For personalised advice, please submit an enquiry. Your home may be repossessed if you do not maintain repayments on your mortgage.

For more information please get in touch and we will be happy to assist you.