Here we debunk some commonly held myths about equity release:
- Myth 1. You are at risk of repossession or losing your home
With a lifetime mortgage, the kind of plan that Responsible recommends, as long as it is governed by regulatory body the Equity Release Council (formerly known as SHIP), you are not at risk of losing your home. This is because you have the guaranteed right to remain in your property for as long as it is your main residence. This guarantee is written into the offer that both you and the lender will sign.
- Myth 2. There will be nothing left to leave as inheritance
There are plans available where you can ‘protect your equity’. Here you choose an amount to protect as a percentage, for example 50%. It does reduce the amount you have available to take but it allows you to ringfence a portion and say no matter what, the decision to release equity will not affect that portion of the property. You get the money you require now whilst your children (or other beneficiaries) receive a sizeable inheritance.
- Myth 3. You will leave debt to your loved ones
As part of the Equity Release Council’s guarantees, you will never owe more than the value of your home. That means you can’t be in any levels of debt from an equity release plan that cannot be covered by the eventual sale of your property.
- Myth 4. You will be stuck in the same house you are in now
All plans covered by The Equity Release Council are ‘portable’. This means you can move them to another suitable property without having to pay any penalty.
- Myth 5. Your family will be forced into a quick sale to repay the equity release debt
Most equity release providers will allow your estate up to 12 months to sell the property before they even ask any questions. As long as they are taking reasonable steps to sell the property, that is all the lender looks for.