12 Myths About Equity Release

There are standards set by the Equity Release Council, so you will never end up owing more than your home’s worth.

No Negative Equity’ guarantee – This keeps your family protected from the interest rolling higher than properties value.

This safeguard guarantees that you won’t ever pay more to settle your equity release loan than the value of your property when it’s sold, even if property prices plummeted. Should there be a shortfall, your provider will write it off and neither you nor your children will be liable.

You could potentially get a later life loan if you have bad / poor credit history.

A bad credit history is an indication that an individual has not been able to meet their financial obligations in the past. This could be due to missed payments on credit cards, loans, or other debts, defaulting on loans, or having a history of bankruptcy or insolvency. Having a bad credit history can make it difficult for individuals to access credit in the future, as lenders are likely to view them as high-risk borrowers.

Because you do not have to make monthly repayments, an affordability check is not required,  whilst your credit history is a factor,  it may not preclude you from taking a later life loan.

Equity release is not only regulated by the Financial Conduct Authority (FCA) like other lending products, but it is also regulated by the Equity Release Council (ERC). The Right Advice are proud members of the Equity Release Council. You are also covered under the Financial Services Compensation Scheme too.

While taking out equity release has its risks, just like any loan secured against your home would.

Actually, repaying an existing mortgage is one of the more common uses of equity release.

However, if you’d like to use your funds for something else, all providers will require that your mortgage be paid off as soon as your funds are paid out to your solicitor before the rest’s transferred to you

You can remain in your home even after releasing equity from it, meaning that you continue to enjoy the benefit of home ownership.

Your home is only sold until you or the last remaining applicant dies or move into a long-term care facility.

Many later life lending products allow you to take an initial agreed lump sum and also provide a reserve, a “draw down facility,  so you can use the drawdown to cover ongoing expenses or unexpected costs only when they arise, rather than taking them straight away when you don’t yet need extra. By doing a draw down, you are preserving the estate as you don’t pay interest until the funds are drawn.

Laterlife lending does not require you to make any monthly repayments, the loan is repaid when you pass away or move into long term care. However, there is the option to make payments should you choose.

If you choose a lifetime mortgage, you can continue to own and live in your home for the rest of your life, and the loan will only be repaid when you or the last remaining applicant passes away, moves into long term care or sells the property.

Later life loans are portable, which means you can move home at any point, (subject to lenders criteria)

Later life lending can be a sensible and responsible way to access the value in your home, and many people use it as part of their retirement planning to supplement their income or meet unexpected expenses. As with any financial product, it’s important to carefully consider the  cost, benefits and risks before making a decision.

Regardless of your employment status,  later life lending is available to homeowners aged 55 or over whose property is worth at least £70,000.

While later life lending can be a useful option for those who are struggling financially, it is also a popular choice for those who want to access the equity in their home to fund their retirement or make a big purchase.