Equity release is an increasingly popular way for homeowners over 55 to unlock the value tied up in their property. It allows you to access tax-free cash without needing to sell or move out of your home. This can provide extra funds for retirement, home improvements, or helping loved ones financially. Despite its benefits, equity release is often surrounded by myths and misconceptions. Here, we uncover four little-known truths to help you separate fact from fiction.
Myth 1: You Lose Ownership of Your Home
Truth: You Still Own Your Home
One of the most common myths about equity release is that you lose control of your property. This isn’t true. With a lifetime mortgage, the most popular equity release product, you remain the legal owner of your home.
- You can continue living in your home rent-free for the rest of your life or until you move into long-term care.
- The equity release provider simply places a loan against the property, which is repaid when your home is sold.
This means you retain full control and can enjoy your property just as you always have.
Myth 2: Equity Release Is Inflexible and Rigid
Truth: Modern Equity Release Plans Are Flexible
It’s often thought that equity release forces you to take a large lump sum all at once. However, modern equity release products are far more flexible and tailored to individual needs:
- Drawdown Plans: You can release funds gradually, only taking what you need when you need it. This also reduces the amount of interest that accrues.
- Optional Repayments: Some plans allow you to repay interest or portions of the loan, helping to manage the overall cost.
- No Obligation to Repay During Your Lifetime: If you prefer, repayments can wait until the property is sold after you pass away or enter care.
This flexibility gives you control over your finances while providing access to the wealth tied up in your home.
Myth 3: There’s Nothing Left for Your Family to Inherit
Truth: You Can Protect Your Family’s Inheritance
A major concern for homeowners is that equity release will leave their loved ones with nothing. However, this myth is outdated. Modern plans allow you to protect a portion of your property’s value for your beneficiaries.
- Many equity release providers offer inheritance protection, allowing you to ringfence a percentage of your home’s value to pass on to your family.
- This ensures that, regardless of the loan amount or interest accrued, your loved ones will still inherit something from your estate.
By working with a qualified advisor, you can structure your plan to balance your needs and your family’s future.
Myth 4: Equity Release Is Risky and Unregulated
Truth: Equity Release Is Safe and Fully Regulated
Equity release has come a long way in recent years and is now one of the safest financial options available for eligible homeowners.
- The Financial Conduct Authority (FCA) regulates equity release, ensuring products are transparent, fair, and suitable for customers.
- Providers who are members of the Equity Release Council offer additional safeguards, including:
- A no negative equity guarantee, ensuring you’ll never owe more than the value of your home.
- Clear and comprehensive advice from qualified professionals.
These measures protect homeowners and ensure equity release is a secure option for accessing property wealth.
Is Equity Release for you?
Equity release is surrounded by myths that can cause unnecessary hesitation. By uncovering these four truths, you can see how equity release offers a flexible, safe, and sensible way to unlock the value of your home while protecting your family’s future.
If you’re considering equity release, it’s essential to get expert advice to ensure it’s the right choice for you. Frog Equity provides clear, professional guidance tailored to your needs, helping you explore your options with confidence and peace of mind.
Contact Frog Equity today to learn how equity release can work for you and your loved ones.
