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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: January 5, 2023
Updated On: January 16, 2023

What Are the Risks of Equity Release?

When considering equity release, you want to make sure you’re fully informed. Fortunately, there is an entire council dedicated to ensuring strict standards are met with equity release products.

There are things you can check and ask before agreeing to take out a loan against the value of your property.

How can you protect against the risks?

  • Check that your loan complies with Equity Release Council’s standards.
    • For lifetime mortgages*, the interest rate should be either fixed or have a maximum limit for the entire duration of the scheme.
    • You should have the right to stay in your home.
  • Check that your plan guarantees ‘no negative equity’
    • No negative equity means that even if your outstanding loan repayments, including interest, surpass the value of your property, when your home is eventually sold, your family won’t be liable to pay anything more.
  • Get advice from a Whole of Market equity release advisor
    • Make sure you’re choosing an equity release advisor that is regulated by the Financial Conduct Authority. You can also benefit from choosing a Whole of Market mortgage broker that isn’t restricted to just one or two lenders.
  • Make sure you know the terms and conditions
    • If you break the terms of the loan, there may be financial consequences. For instance, equity release usually applies to a home that is your main residence. If you want to move house, you will need to get approval from your lender before transferring the mortgage. A mortgage broker should take the time to go through the terms and conditions before you sign-up to make sure you understand what you can and can’t do.

You should be given time to consider the impact of equity release and discuss your plan with your family, if appropriate. You can change your mind at any point until the solicitor receives your loan money.

We hope this article has cleared up some of the areas that you may have been concerned about. As an Whole of Market Equity Release Advisor, we ensure this type of mortgage is right for you and always follow the industry standards and best practices. Contact us today to arrange your free initial consultation.

*A lifetime mortgage is a long term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate.