Equity release doesn't have to be a minefield
Spend 5 minutes online and you'll find lots of people have opinions on equity release. At The Equity Release Advice Company, you can be sure that you're getting the facts. We are an FCA regulated firm and have spent years helping people cut through the misinformation and confusion, so they can make a well-informed decision.
The 6 most common myths and misconceptions we hear:
Myth: “I will no longer own my own house”
Facts: This is probably the most popular myth and it’s not true. You continue to own your home. Your name is on the deeds and the lender has a charge on the property, just like a traditional mortgage. If you want to move house you can ask the lender to move the mortgage onto the next property.
Myth: “I already have a mortgage so can’t release equity”
Facts: Probably the most popular reason that we release equity for our clients is to repay an existing mortgage. Subject to lenders loan to values criteria you may be able to release more than your existing mortgage in order to achieve other financial objectives.
Myth: “I might be passing on a debt to my beneficiaries”
Facts: Another very popular myth and in the past this was certainly possible and in times of recession it did happen. These days, all plans come with a “No Negative Equity Guarantee” so that provided you have complied with the terms of the mortgage you can never owe more than your house is worth.
With some plans you may be able to take advantage of an ‘Inheritance Guarantee’ which will guarantee your beneficiaries a certain percentage of the eventual sale proceeds.
Myth: “The debt builds up and there’s nothing I can do about it”
Facts: These days all plans come with the feature that allows you to make payments to the plan. This means that you can slow down the roll-up of interest, or even start to repay part of the debt.
There is even a plan available that looks and feels like a traditional ‘interest-only’ mortgage where you can pay the exact amount of interest each month and your balance will remain the same as on day one.
Myth: “Equity Release is an expensive way of borrowing”
Facts: This is not necessarily true. You can benefit from a rate that is fixed for life and plans are currently available with rates that are competitive when compared with traditional mortgages with a five-year fixed rate.
