Are you falling for any of these myths about equity release?

23 November 2021

There’s no shortage of myths about equity release. Since 55Plus Equity Release was founded over 15 years ago, we’ve heard them all. Here are five of our favourites and what you really need to know about releasing equity. 

Myth 1: Equity release is bad 

Many people can initially have negative connotations with the term equity release’, but it’s actually just a way to describe lifetime mortgages and later life borrowing —which are options that people seem to feel a lot more comfortable with!

A lifetime mortgage is the most popular type of equity release scheme as it can let you access some of the wealth in your property while you continue to live there, only repaying the debt when you move into long-term care or pass away. The other type of scheme is a home reversion, in which you sell a portion of your property to the lender, but equally will still be able to stay in your home without paying rent.

Myth 2: Equity release is unregulated 

The equity release sector is highly regulated, meaning that you’re always guaranteed certain standards, with all equity release products meeting particular criteria. Unfortunately, many people still incorrectly believe that the equity release sector is unregulated, and are hesitant about whether it might be right for them. In addition to strict industry monitoring and regulations, all of our experienced advisers belong to the Equity Release Council – the body that represents the industry. 

Myth 3: You’ll end up owing more than you own 

One of the standards that all equity release plans must meet is that they have a no negative equity’ guarantee. This means that the value of the property on death or moving into long term is less than you owe the lender, the balance will be written off by the lender.

Myth 3: Equity release is just for those who are struggling financially

The average amount of equity being released has actually risen substantially, highlighting that people in more valuable properties are now turning to equity release as the right financial option for their lifestyle choices. Lifetime mortgages even have several benefits over traditional mortgages, meaning that it can sometimes make financial sense to switch to one if you qualify!

Myth 4: Very few people qualify for equity release 

While there are certain properties where it will be more difficult to release equity from, with so many lenders and products on the market, many people qualify for an equity release plan. The best way to find out is by talking to an experienced equity release adviser, who can advise you on the best options for your personal circumstance. 

Myth 5: You can’t repay the interest on your loan 

There are hundreds of equity release products available to homeowners over 55, many of which accommodate flexible repayment plans. This lets you pay off interest on your loan, so you can pass on more to your loved ones. In fact, equity release plans are far more flexible than you may think, with options such as whether you receive your money all in one go or in instalments, and whether you can make early repayments or not. 

If you want to learn more about equity release and whether it might be right for you, then please get in touch. 

Safe consultations: socially distanced, over the phone or by video call – we are happy to hold our initial free consultations however you feel safest, in line with current guidelines.

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