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Equity Release

Learn More About Equity Release Options

Equity Release mortgages are not like residential mortgages. They help you secure a loan against the value of your property. In these guides we outline what makes them different, the eligibility criteria and help you decide if it’s an avenue you would like to pursue. It’s a way to free up money in your later years, but with many factors influencing the loan, it’s good to learn as much as you can from qualified mortgage professionals.

Posted On: August 19, 2021
Updated On: August 9, 2022

Is Equity Release Safe?

One of the big questions you may have before taking the plunge and deciding to agree to an equity release loan is whether or not it’s safe.

We all hear stories of people having their homes repossessed and falling into debt – how do you know that this won’t happen to you with equity release? In this article, we’re listing the top reasons that equity release mortgages are safe and the top things to consider before agreeing to take on this particular type of loan.

Reasons equity release mortgages are safe?

  • It’s protected by the Financial Conduct Authority

As with most mortgages, equity release loans should be protected by the Financial Conduct Authority, meaning they are official mortgage products that come with the same level of protection as other loans.

  • No negative equity guarantee

No negative equity guarantee is part and parcel of all Equity Release lifetime mortgages governed by the Equity Release Council. This means if the value of your loan along with the interest exceeds the final sale price of your property, the rest is written off. This means your family won’t be impacted.

  • You can pay off the interest as you go

Lifetime mortgages accrue compound interest. And as interest for equity release mortgages tends to be a little higher to begin with, this means you’ll want to watch how much interest you owe. It’s often recommended that you pay off the interest in instalments as you go to prevent it from spiralling into large sums that could leave your beneficiaries with very little to inherit.

  • You won’t risk losing your home with equity release

As long as you uphold the terms and conditions set down in your mortgage contract, you can’t lose your house with equity release. You are free to live in your home as normal.

What’s the catch?

The catch is that the loan value may be lower than the true market value of your property, meaning you’re losing a little money. Accessing money in this way also means any beneficiaries will inherit less, as equity release takes away the value of your home.

Not only will the loan need to be paid back, the interest accrued will also need to be paid. However, as mentioned above, a no-negative equity mortgage means your home will be the only asset used to pay off this mortgage. This means any extra will simply be written off. Importantly, it won’t affect your other assets, or your loved ones or beneficiaries.

Speak to Agentis today to arrange your free initial consultation. We are experienced mortgage brokers based in Peterborough with ‘Whole of Market’ access meaning we can find the best deal for you.