Friday, June 21, 2024

Latest Posts


Equity Release Companies to Avoid

Beyond having a safe and comfortable place in which to live and, perhaps, raise a family, a home is an investment that can work for you and for your future goals. As you pay on your mortgage and build value, you increase the amount of equity you have. Equity is, in the simplest terms, the difference between the home’s value and what you owe on the mortgage. Equity release plans allow homeowners access equity if they need to make improvements, fund renovations, pay off debt, plan for retirement and more.

We’ll discuss how this works and which equity release companies to avoid so you do not fall into any unexpected traps.

Equity Release Plans

Equity release plans are designed for homeowners aged 55 or older in the UK to access some of the equity through cash lump sums or regular income. You do not need to repay this until either you move into care or pass away. At that point, your estate pays the lender (usually this comes from the proceeds of your home’s sale but your executors can repay by other means, if they choose).

Minimum equity release is £10,000 while the maximum amount depends on your age and the property’s value. For example, if you are 55 years old, you may access 33.2% of your equity. If you are 80, you can access 59.6%. The vast majority (99%) of new equity release plans involve a lifetime mortgage. Very similar to a regular home mortgage, you will retain full ownership of the house. Your lender registers a charge on your property, your interest rate is fixed for the life of the mortgage, you may move home if you wish, there is protection against downsizing and there is a significant life event exemption.

Home reversion plans are another method, but they are not suitable for most people. You can get more cash but you will have to sell all or part of your home. For most of us, this is just not worth it.

Equity Release

Equity Release Companies to Avoid

Now that we have that out of the way, let’s talk about equity release companies to avoid. This is important in protecting your rights and in ensuring you access the equity you need without facing unexpected consequences. The last thing you want is to find yourself in an even more challenging financial situation. Here are some red flags for which you should be looking:

● The equity release company is not a member of the Equity Release Council. The Council protects you from risk, encouraging high equality, ethical conduct and guidance and protection for consumers.
● They do not guarantee no negative equity. In a negative equity situation, you end up owing more than the value of your home. The best companies will have a no negative equity guarantee, so once you have paid your debt up to the value of your house, the rest is written off.
● The interest rates are not fixed or capped. You should seek another provider if the company does not offer a fixed interest rate for the lifetime of the mortgage or, at least, cap their variable rate at a certain limit. This could end up costing you thousands of pounds.
● They do not guarantee you can stay in your home. This can put you in a very dangerous situation. Make sure you have the ‘Right to Remain.’
● They do not explain your options or disclose all of their fees, costs and terms and conditions. It is vitally important that you understand your equity release plan, how it works and the pros and cons. A reputable company is happy to explain this in clear language as well as answer any questions you have.


Equity release can be a great way to access funds for a variety of goals for those aged 55 or older. Remember that there are protections in place to safeguard you, including the Equity Release Council and the Financial Conduct Authority. You should also seek guidance from a financial advisor. Making the best decision possible for your needs and goals is imperative. There is support and there are resources to help.

Your home is likely your biggest investment. With equity release through reputable companies, you can make sure it is working as hard and as smart for you as possible.

Latest Posts


Don't Miss