Page 5 - Quick Equity Release Guide 2020

Equity Release Myths
There are many misconceptions and miscommunications around equity release that still prevent people from seriously considering it as an option. It’s no wonder people are struggling to separate fact from fiction when it comes to Equity Release.
“I will be thrown out of my home”
No.
You will never be asked or expected to move out of your home. With a lifetime mortgage, you are still the owner of your house and the property stays in your name. The Equity Release Council states that when you take out equity against your home, you and your partner still jointly own the property and you both have the right to live there as long as you want until the last survivor dies or goes into long-term care.
“I will end up in negative equity”
The market is highly regulated with the Financial Conduct Authority (FCA) introducing important consumer protections. We like most lenders are also members of the Equity Release Council. This means that any plan you take out with us will come with a no-negative-equity guarantee.
“It’s expensive and interest will roll up over time”
Not necessarily. There are now ways to manage your interest with lifetime mortgages, you can take lump sum or smaller amounts over a time- and you can choose for the interest to be added to the total loan amount. However, if you do want to manage the amount you owe, many providers offer the option to repay some or all of the interest. This means it won’t roll up over time and the original loan amount stays the same.
“If I use equity release, I have to take all my money in go”
With over 300 products on the market there is a wide range of options available including many products that let you take money out of a pot as an when you need it, rather than in a lump sum. Taking the money in smaller chunks, rather than in one go, also reduces the amount of interest that is added to the loan each month.
“I won’t be able to leave my family an inheritance”
Equity Release can be used as a gift for family, friends and loved ones in a ‘living inheritance’. Recipients of such ‘gifts’ may have to pay inheritance tax in the future. Instead of receiving it in their 60s or 70s when it’s “too late”, it could give them support at a time when it’s arguably more beneficial.