If you’re over the age of 55 and looking to borrow money for whatever reason, one effective way of doing so is through equity release. 

Because of unregulated lending back in the 80s and 90s, however, lots of myths have emerged about this way of accessing finance, potentially putting people off from considering it as an option.

So to help you decide if it’s the right path for you to take, we thought we’d dispel some of the more common equity release myths that you might have heard.

And, of course, if you need any further help or advice, simply get in touch with the BR Needham team and we’ll be able to provide you with all the guidance you need.

Myth #1: I won’t be able to leave an inheritance behind

There are many ways in which you can use the money obtained via equity release and leaving an inheritance for family members is certainly one of them. 

You can give a living inheritance, for example, or add an inheritance guarantee to a lifetime mortgage application – although note that this means you won’t be able to borrow as much.

Myth #2: I could lose my home

You don’t need to worry about finding yourself homeless if you opt for equity release, as lenders must ensure that you have the right to remain in the property for life or until you move into long-term care. You will continue to be the legal owner of the house until it’s sold.

Myth #3: Equity release is too risky

All equity release products are regulated by the Financial Conduct Authority, so protections are in place to ensure that the option is right and affordable for you.

Advisers must also be fully qualified and have permission to provide financial advice to customers, with codes of conduct in place to ensure that only regulated products are sold.

Myth #4: I’ll have to increase my monthly repayments

What you don’t need to worry about particularly is having to increase the amount you pay each month (if you haven’t paid off your mortgage yet). All costs from equity release can be resolved when the house is sold either when you pass away or move into permanent residential care.

However, you can choose a product that gives you the option to make regular repayments, which can reduce the total cost of what you’re borrowing by driving down the amount of interest you pay.

Myth #5: I’ll owe more than my house is worth

One very common worry is that people will end up owing more in debt than the value of the house if they go for equity release – but this isn’t the case. 

Regulated products have to feature a no negative equity guarantee, so you’ll never owe more than your home is worth once it’s sold… as long as you meet that specific product’s terms and conditions.