Equity Release Myths: Are They True?

By 2nd July 2019Blogs

There are many myths surrounding equity release that need to be addressed. Equity release is a fantastic option for many homeowners, as long as you find the right plan. Understanding what equity is and why it could benefit you will disregard any common myths.

Essex Equity Release offer advice and a range of equity plans to ensure every homeowner receives the best plan. We can discuss every option you can take and what the best path is for you and your home.

Inheriting Debt

Whether this is for you to pay out yourself or leaving a debt for your children and loved ones, it is something nobody wants after releasing equity. However, this is not actually a common occurrence and with our plans, you never inherit debt.

Essex Equity Release have many plans available but regardless of the provider we use, you are assured of a no negative equity guarantee. This means, no matter how much you owe your provider, you never have to pay more than the value of your property. As equity only requires repayment when you and your partner move into long term care or pass away, repayment can always be made with the sales from your home.

This also means children will never inherit debt as the equity will be paid off before this could be passed onto family members and friends.

Switching Homes & Plans

A big worry for many homeowners is that you may not want to live here for the rest of your life or you could end up choosing the wrong equity plan. Whilst we try to give you as much support as possible and find the best plan, mistakes can be made and you don’t want to suffer because of this.

Subject to the criteria of each individual plan, you will be able to both move homes or switch to a different plan. People who have previously released equity may find that newer equity plans offer a better deal, interest rate and are less expensive for a homeowner, meaning switching could be beneficial. If this is important to you, we can make sure a plan is always selected with the option of switching equity plans without a fine.

When finding a new home, there are still several rules you must follow in order to avoid early repayment fines or have your equity plan end early. Many equity plans will allow downsizing protection so that, typically after five years, you can downsize properties without a charge and switch house to a smaller property. Some plans will also allow you to move home without any charge as the new property will match the criteria of your current equity plan.

Retaining Ownership

Another big worry for homeowners is that when releasing equity, you will not retain full ownership of the property. This is, again, down to the criteria of your equity plan. There are two types of equity plans available which are lifetime mortgages and home reversions.

All plans that are lifetime mortgages allow you to retain full ownership of your property. Regardless of what equity scheme you select, you can be assured that lifetime mortgages will give you full ownership. This is because lifetime mortgages are a loan against the value of your property, rather than selling part of your home. Home reversions will also allow you to retain ownership, however, this will be part ownership. Home reversions mean you sell part of your property to a third party and when your equity plan comes to an end, part of the property that is sold will pay off the third party.

Monthly & Long-Term Repayments

Monthly repayments are not ideal for many homeowners and all our plans ensure you have no monthly repayments. Whilst you always have the option of making voluntary, partial repayments to pay off some of the equity, this is never a necessity. Using this method will allow you to pay up to 15% of the amount you’ve borrowed every year and also means there are no early repayment charges.

With the majority of homeowners, releasing equity usually means you will make repayments when the equity plan comes to an end. This will only happen when both you and your partner either pass away or move into long term care. Therefore, your house is vacant and can be sold, allowing you to easily repay the equity you have released without any financial issues.

Contact Us

If you would like to begin the process of releasing equity, contact Essex Equity Release today. We can provide a fast response and organise a consultation over the phone, through email or with a home or office meeting to find the right plan for you. Call us today on 01268 799211 or fill in our contact form to make an enquiry.