Here we cover some commonly held myths about equity release
Equity release has always drawn mixed reactions with many believing that equity release amounts to tying a financial noose around your clients neck. However, this is not the case – particularly in the last several years as equity release becomes more and more flexible.
We de-bunk 5 commonly held myths about equity release:
- Myth 1. Your clients are at risk of repossession or losing their home.
With a lifetime mortgage, the kind of plan that Equity Release Responsible recommends, as long as it is governed by regulatory body the Equity Release Council (formerly known as SHIP), your clients are not at risk of losing their home. This is because they have the guaranteed right to remain in their property for as long as it is their main residence. This guarantee is written into the offer that both your clients 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 they have available to take but it allows them to ring-fence a portion and say no matter what, the decision to release equity will not affect that portion of the property. Your clients get the money they require now whilst their children (or other beneficiaries) receive a sizeable inheritance.
- Myth 3. Will they leave debt to their loved ones?
As part of the Equity Release Council’s guarantees, your clients will never owe more than the value of your home. That means they can’t be in any levels of debt from an equity release plan that cannot be covered by the eventual sale of the property.
- Myth 4. Will they be stuck in the same house they are in now?
All plans covered by The Equity Release Council are ‘portable’. This means clients can move to another suitable property without having to pay any penalty.
- Myth 5. Families will be forced into a quick sale to repay the equity release debt.
Most equity release providers will allow your clients 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.
Author: Chris Prior
Head of Partnerships and Development at Responsible Equity Release
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