Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

Is Equity Release Safe?

The facts and the myths.

.The Guarantees

The Equity Release Council (ERC) is an independent body that provides a further layer of protection over and above that provided by the Financial Conduct Authority (FCA). All the plans I recommend via the Equity Release Advice Centre, have the following guarantees as standard.

  • The right to stay in your home for life.
  • The right to move home if you want to.
  • A no negative equity guarantee.

The right to stay in your home for life
Let’s be clear, with a lifetime mortgage you don’t sell your home. You remain the owner, just as you did if you had a mortgage earlier in your life. The lender, or provider, takes a first legal charge over the property. The lifetime mortgage comes to a natural conclusion when your home becomes empty on the event of the second person (if a joint application) going into long term care or passing away. At this point, your beneficiaries would sell the property and repay the outstanding balance. Or it could be bought by a family member and the loan repaid in that way. Any surplus proceeds go back to your estate for distribution as per your will instructions.

The right to move if you want to
You can move home in the future and take the existing mortgage to your new home. However, the amount outstanding must “fit” within the new property value, and the new property must be acceptable to your lender as security.

No Negative Equity Guarantee
Simply put, you never leave a debt for your beneficiaries to pay. When the property is sold, if there’s insufficient value in your home to repay the mortgage in full, the lender absorbs the difference.

You also have the right to have independent legal advice and can choose to use a family solicitor to complete the legal work. However, I would always recommend you use a specialist independent firm that deals with equity release transactions every day of the week. You would benefit from: 

  • A fixed price from the outset.
  • A home visit to complete the paperwork (subject to social distancing).
  • If you decide not to proceed, no completion no fee. (You would only have to pay for any disbursements incurred).

Generally, cases handled by specialist firms complete more quickly because they know what to expect and are aware of common pitfalls!
For further information about the ERC, please visit their website: Equity Release Council