Equity release - Busting common myths

• Helping family members, such as contributing to education fees or getting them onto the property ladder.
• Home improvements to enhance their home or carry out adaptions that make it possible for them to stay in their home longer term.
• Holidays and trips to help enhance their retirement and get the most out of it.
• Lifestyle improvements like a new car, a hobby or to provide care in the home.
• Provide additional income to supplement a pension.
• Pay off outstanding debts to relieve the pressure of monthly outgoings.

However there are a number of common myths that may put prospective clients off equity release. We have outlined the main ones below and answers to dispel these.

I won’t own my home anymore, so I might lose it.

This is a surprisingly common misconception. People are regularly relieved to hear that a lifetime mortgage means they remain the owner of their home.

I don’t want another mortgage now, I can’t afford the repayments

This is the downside of equity release when clients discover that the most popular equity release product is actually a mortgage. However doubts are often dispelled once they learn that repayments are not normally required until the borrower dies or goes into long-term care.

I have a blemished credit record.

Lending is based on the market value of the property, age and health status of the borrower. Income and credit history are not taken into account.

I don’t want my children inheriting a debt.

A ‘no negative equity guarantee’ invariably comes as a pleasant surprise to people with little prior knowledge of equity release products.

I won’t be able to leave anything to my children or grandchildren.

We encourage good communication between family members before someone opts for equity release. This gives potential beneficiaries the chance to clarify their true priorities. There is also the option to take up an equity release product with built-in equity protection to provide an ‘inheritance guarantee’.

I might not want to stay here forever. Wouldn’t equity release tie me down to this home?

Again, many people are surprised to learn that portable equity release products are available, depending on a number of criteria, including the value of the home being moved into.

Please speak to one of our Mortgage Consultants if you are considering equity release or you'd like to discuss your current mortgage situation.

Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.