Is Equity Release Safe?

Written by Daniel Tannenbaum on July 15, 2021

Updated February 13, 2022

Yes, equity release is a safe option to consider, regulated by both the FCA (Financial Conduct Authority) and the Equity Release Council.

This means you can rest assured that the industry is properly managed by not one but two reputable regulators. All brokers, lenders and advisors operating within the equity release sector must also adhere to guidelines and be authorised to advise and lend on deals of this nature.

The Equity Release Council has implemented rules for brokers and lenders to follow, helping to safeguard customers. These include:

  • No negative equity guarantee – protecting borrowers from negative equity.
  • Customers can stay living in their home (until they die or need long-term care).
  • Customers must receive financial advice as part of the equity release process.

In addition to this, the FCA have put strict guidelines in place, which when broken could cause heavy fines for the businesses in question, and potential shutdowns of operations completely.


See Also

Can I lose my home from equity release?

Do you still own your home with equity release?

The equity release companies to avoid

What happens with equity release when you die?



How Do Repayments Work?

Typically, in the case of lifetime mortgages, the equity release loan is repaid via the sale of the house. When taking out equity release in the form of a lifetime mortgage, repayment will only start either once you permanently move out of the house for long-term care or pass away.

While typically repayments will only need to start once either of these two events occur, borrowers do have the choice to repay some of the money borrowed early, helping to reduce how much is owed.

Depending on your circumstances, you may have the option to make monthly interest payments, helping to reduce the cost of the loan once the remainder of the repayment is required.

You may also be able to repay the full amount of the loan early. However, it’s important to note that this may come with Early Repayment Charges.


Equity Release Key Features

Equity release comes with some fantastic features, including the following:

  • Borrowers can remain living in their home (either until they die or go into long-term care).
  • Equity release is typically repaid via the sale of the house.
  • You’ll still be able to leave an inheritance to loved ones.
  • The money from the equity release can be spent on various things, e.g., a wedding, home improvements or to give to your family.
  • Intended for use by those 55 and over.

Equity release can be a great way to unlock some of the cash tied up in your home. Find out more on your equity release options with Lending Expert today.




Will I Still Be Able to Pass on an Inheritance?

Yes, you can still pass on an inheritance with an equity release loan. A common concern many have when considering equity release is whether this will prevent them from leaving an inheritance to their loved ones. However, there are still a few ways in which you can leave an inheritance, even with this type of loan.

Some people may use the money they receive from the equity release to pass on to their loved ones while alive. This gives borrowers the opportunity to see their family enjoying and making use of their inheritance.

Additionally, depending on the equity release product you have, borrowers may be able to ask their lender to put aside a sum of money as their inheritance.


Is Equity Release Right for You?

Whilst equity release is a great option to consider when wanting to unlock some of the money held up in your property, it’s not the right choice for everyone.

Equity release is only appropriate for those 55 and over, and can depend on a range of other circumstances, including plans for your future, your income, and the amount of money you’re looking to borrow.

Therefore, it’s important to give real thought into whether equity release is the right option for you. For those under 55, it might be worth considering other borrowing methods, including a secured loan or a remortgage.

There’s a range of different borrowing options out there, meaning if equity release isn’t right for you, there are a number of other borrowing measures that could be better suited to your needs and unique financial circumstances.


To discuss your equity release requirements today, you can get a free and impartial quote from Lending Expert here >>


Leave a Reply

Your email address will not be published.