Common Misconceptions About Equity Release and Lifetime Mortgages

That’s often down to outdated myths and misconceptions that can make equity release seem more complex or risky than it actually is. In this blog, we’re setting the record straight on some of the most common misunderstandings about equity release and lifetime mortgages, so you can make informed decisions with confidence.

1. “You lose ownership of your home.”

This is one of the biggest myths about equity release. With a lifetime mortgage, the most popular form of equity release, you retain full ownership of your home. You can continue living in it for as long as you wish, and the loan is only repaid when you pass away or move into long-term care. Importantly, the lender will register a first charge on your property title, meaning they have the legal right to be repaid first from the proceeds if the property is sold. It doesn’t affect your ownership, it’s just a way to protect the lender’s interest.

2. “Equity release is unregulated and risky.”

Not true. Equity release products are regulated by the Financial Conduct Authority (FCA), and providers who follow Equity Release Council (ERC) standards offer important protections. These include a no negative equity guarantee, meaning you’ll never owe more than your home is worth.

3. “It’s only for people in financial trouble.”

Equity release isn’t just a last resort. Many people use it to enhance their retirement lifestyle, whether that’s funding home improvements, helping family members financially, or simply enjoying more freedom in later life.

4. “You can’t move home if you take out equity release.”

Most lifetime mortgages are portable. That means you can move to a new home and take your plan with you, providing the new property meets your lender’s criteria. Flexibility is built in, and your equity release adviser will help you understand any conditions or early repayment charges.

5. “My family will be left in debt.”

Thanks to the no negative equity guarantee, your loved ones won’t be left with a bill. The loan is typically repaid from the sale of your home, and you’ll never owe more than its value.

6. “You have to make monthly repayments.”

Most equity release plans don’t require monthly repayments. Instead, the interest rolls up over time and is repaid along with the loan when your home is sold. Some plans do offer the choice of making optional partial repayments if you wish to reduce the overall cost of your lifetime mortgage.

7. “You can’t leave an inheritance.”

While equity release can reduce the value of your estate, it doesn’t mean you can’t leave anything behind. Some plans offer inheritance protection, allowing you to ring-fence a portion of your home’s value. You can also make optional repayments to preserve more of your estate, if the product allows you to.

8. “It affects your benefits.”

Equity release may impact means-tested benefits, but this depends on how you use the funds. A qualified adviser will help you understand any implications and guide you through your options

Want to know more?

Equity release isn’t one-size-fits-all. That’s why it’s essential to speak with a qualified adviser who can provide personalised advice based on your circumstances. They’ll help you explore all your options and decide whether equity release is right for you.

This is a lifetime mortgage. To understand the features and risks, please contact a qualified adviser.