Is Equity Release Safe

Is Equity Release Safe

Find Out Why Equity Release Isn't The Big Bad Wolf They Have Led You To Believe It Is

Equity release may seem dangerous, which is why you're probably questioning how risky of an affair it is.

I think you'll agree with me:

Any service's safety is dominant to it serving your best interests – both now and in the future. Equity release has a myriad of safety features that make it an excellent choice to deal with your circumstances and needs.

In the 1980s and early 1990s, the industry's corrupt practices left equity release with a tarnished reputation. Some unscrupulous lenders were undertaking exploitative deals, leaving homeowners owing more than the worth of their property.

How Safe Is Equity Release Now?

Equity release schemes remain regulated by the Financial Conduct Authority (FCA), and providers must register with the Equity Release Council; a body that governs best practices both for independent financial advisors and equity release companies

The council ensures that:

All rates must remain fixed. If not, the scheme provider must underline an upper limit set for the loan's lifetime.

You may occupy your property until you die or move into long-term care.

You can move to another property as long as the new property offers the same security level for your initial equity release.

Any lifetime mortgage plan comes with a 'no negative equity guarantee.'

Still Wondering If Equity Release Is a Safe Option?

Here are some reasons we consider equity release to be the best decision you make:

#1. The Financial Conduct Authority Regulates It.

They are the official financial product watchdog and regulator in the UK.

Is Equity Release Safe


The agency oversees the lenders, brokers, and financial advisers who deal with all financial products. It ensures that lenders register and that follow the stipulated codes of conduct.

#2. The Equity Release Council

As an equity release governing body, the council ensures its members adhere to the strict code of conduct that safeguards consumers.

Before taking out your equity release, ensure that the broker you choose in the Equity Release Council registers.

#3. The No Negative Equity Guarantee

The 'no negative guarantee' is in place to ensure you never owe more than the value of your property. Suppose your property drops value, and putting it up for sale isn't enough to repay your loan. In that case, your lender will write it off when you pass away or move into permanent care.

#4. You Have the Right to Occupy Your Property

With a lifetime mortgage, you can still live in your home. You don't have to sell any part of your property to unlock the capital you require – you borrow against its equity.

As per the ERC's rules, if it's a joint partnership, you're eligible to remain the sole proprietors until you both die or go into care homes.

#5. You Can Move House

The ERC serves you the right to carry your equity release plan with you, as long as you're moving to a 'suitable alternative estate.' A place that meets the lending standards of your plan provider.

Remember that you might need to repay part of what you owe if you move to a less expensive home, according to your lender.

#6. You Must Consult an Advisor

As per the ERC's regulations, you must get advice from a qualified professional before releasing equity.

#7. Your Estate May Keep an Inheritance

If there's any money left after, that can go to your beneficiaries (regarding your will). Your provider can also offer you a particular option to choose to ring-fence some value of your estate. Just let your adviser know so that they can get you a suitable equity release plan.

Equity Release Schemes Are Quite Flexible

As the equity release market continues growing, most providers give you plans with more fantastic choice varieties.

Is Equity Release Safe

These are:

Fixed rates for life, meaning you'll always know how much you'll owe in the future

Fixed early repayment charges, you'll remain aware of the penalty, if you desire to repay your loan early

Plans allowing you to make ad hoc voluntary payments which will aid you in managing your balance in future

Downsizing protection to make sure you repay your equity release loan, with no penalty, if you move home five years after the inception of the plan

In Conclusion

Equity release is an excellent option in the right situation. However, before making final decisions, it's imperative to understand what's involved.

With that in mind, ensure that you get advice from an independent adviser that'll talk you through the specifics and help you make a knowledgeable decision.

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