For homeowners over the age of 55, equity release can be a fantastic way to improve your financial well-being. Essentially, equity release involves freeing up some of the money that is tied up in your property. People often use equity release to fund home improvements, to go travelling, to help out their kids or simply to improve their standard of living in retirement. There is a lot that is misunderstood about equity release products, so this post will address these misconceptions and hopefully help you to make an informed decision.


“Equity Release is Dangerous & Unregulated”

Many people fear the idea of equity release because they do not properly understand how it works. Although there are some complexities to these financial products, this does not mean that they are dangerous and they can be a useful tool for people to improve their financial well-being. Additionally, all equity release plans are regulated by the FCA, so you have protection if this is a path that you go down.

As there is a lot to consider with an equity release mortgage, it is important that you choose a trusted equity release provider. They will be able to explain everything to you in detail, offer advice based on your situation and guide you through the process.

“Equity Release is Too Complicated, I Don’t Understand it”

While equity release has some important considerations, it is not a financial product that is overly complicated. Additionally, as a product that could greatly improve your quality of life, it is worth looking into, especially if you are worried about your retirement income. A good advisor will be able to explain equity release to you in simple terms and help you to understand the benefits and risks involved.

“I Won’t Own my Home Anymore”

One of the biggest misconceptions that puts people off equity release is that they believe that they will not own their homes anymore. It is important to be aware that there are two types of equity release; lifetime mortgage and home reversion. With a lifetime mortgage, you retain ownership of your property and will benefit from future increases in value. Essentially, this is a mortgage secured against the property and the loan amount and interest can be paid back by selling the property after the last borrower dies or moves into care. This means that there are inheritance considerations with this option.

With a home reversion, you will sell part or all of your home to the lender in exchange for a lump sum or regular payments but you still have the right to live there for the rest of your life.

These are a few of the main misconceptions that people have about equity release. While there is a lot to think about, it is often an excellent way for homeowners to boost their savings and improve their standard of living.