A Comprehensive Guide That Details Equity Release Financial Safety

Equity release loans offer many customers a way to support themselves through retirement, by taking money out of their property either as a lump sum or as regular payments to top up a pension. But there are scams out there, as well as lenders who might not offer fair products.

Are Equity Release Plans Safe?

As long as you use a reputable Equity release lender with a ‘no negative equity’ guarantee, Equity release loans are entirely safe. You should make sure you fully understand the impact on your estate before you sign an agreement.

Providing you used a reputable Equity Release lender with a ‘no negative equity’ guarantee, equity release loans are entirely safe, although high-interest rates can make a dent in your estate when you’re gone.

If you’re worried about whether an equity release loan is safe, read on to see what you should look out for.

Looking for other information on Equity Release? This guide has info on 'How safe are Equity Release schemes?' We have also written extensively about:

• - Releasing Equity for new property?
• - Jointly Owned property Equity Release schemes
• - Equity Release to help with Retirment Planning
• - Equity release schemes tax implications

We update all our guides regularly. If you are researching Equity Release and we haven't got an exact guide that helps you, keep coming back as we update daily.

Affordability of Equity Release Loans

One of the most important things to look for when you apply for equity release loans is a ‘no negative equity’ guarantee. Any reputable lender will include this, and if they don’t, you should avoid them immediately.

To understand why this is important, you need to know that equity release loans don’t take repayments from you while you’re living in your home. As soon as you pass away, or move into care, your debt becomes repayable from your estate.

Interest Rates for Equity Release Loans

Interest rates for equity release loans are higher than other types of loan, so with no formal repayments, the interest will build up and compound quite rapidly. Which means you can end up owing a lot more than you originally borrowed, especially if you take equity release when you’re 55 and then live a long and happy life.

A ‘no negative equity’ guarantee ensures that your total repayable amount will never exceed the value of your home. So that when you do go into care, or die, the sale of your home will be enough to cover it. This protects your family, as it means they don’t need to pay from their own pockets to repay the debt you’ve accrued.

Equity Release Scams

The other thing to look out for is Equity Release Scams. With the rise in popularity of equity release loans, so to has there been an increase in ‘dodgy’ comparison sites looking to sell vulnerable customer data to telesales operatives, who may try to trap people in agreements that are painted as no fee and no-obligation quotes but are actually laden with hidden costs.

Never allow yourself to be pressured into taking an equity release loan, and always do your research. Check the Financial Conduct Authority website to make sure your lender is registered and compliant with all laws, and head to independent review websites to ensure companies are reputable, before making any decision.

Is Equity Release a Good Idea?

For many people reaching retirement who need a little extra financial help, equity release is a good idea. You should always just make sure you’re speaking to a reliable and honest advisor, and that your estate and your family are protected.

How Can Money Savings Advice Help You With Releasing Equity?

Here at Money Savings Advice, we have partnered with some of the UK’s leading Equity Release brokers. They have already helped thousands of people get the best Equity Release deal and they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.