Equity Release Facts in Dec 2021

All the Details You Need to Know About Equity Release in the UK

Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui

Don't Get Caught Unaware! Here Are Some of the Top Equity Release Facts You Need to Know to Make Sure You Understand How Unlocking the Value of Your Property Can Boost Your Finances.

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5 Facts About Equity Release You Must Know

Knowing these Dec 2021 equity release facts will prevent you from being fooled by fiction!

More and more homeowners over the age of 55 are using equity release to unlock the cash tied into their estate every year. However, entering into an equity release plan without the right knowledge could be detrimental to your finances.

AND, if you’re not aware of all the facts, you could miss out on golden equity release opportunities.

We’re here to help you discover:

  • Intricate details of the equity release market in Dec 2021.
  • How to get the most from your equity release plan.
  • If releasing equity is the best way to fund retirement.
  • If equity release is safe for retirees and their families.

Through extensive market research and combing over 220 plans, we’ve put together the 5 equity release facts that you need to know.

Are you wondering what these are? Continue reading to find out now!

What’s Equity Release?

Before you do so, first check out this quick video that summarises what you need to know about equity release:

Learn More: How Do You Release Equity in Your House?

5 Things You Might Not Know About Equity Release in Dec 2021

So by now, you should understand what equity release is, but you might be looking for all the facts.

Here are the 5 most critical facts to consider in Dec 2021 before releasing equity from your home:

You Can’t Pass On the Debt

1. You Can Make Multiple Withdrawals With Equity Release

Although you can release your cash in one big lump sum, you don’t have to!

You can release equity in 3 ways:

  • A single lump sum, generally to fund a big project, an investment, or pay for your dream holiday.
  • A few smaller lump sums, should you wish to have a few large cash injections over a period of time.
  • Monthly payments that will function like a salary. You can take out one initial amount, followed by these smaller monthly payments.

You can read more about: The Common Myths About Equity Release

Be Sure to Get Financial and Legal Advice Before Taking Out a Plan

2. You Can Pay Back the Interest on Your Loan

One of the biggest pros of releasing equity from your home is that there is zero obligation to pay back any of the loan, or interest, during your lifetime.

Equity release interest is compounded which means that the debt gradually increases with time.

Know more about: How Equity Release Interest Rates Work?

However, while there is no obligation, some products allow you to pay back the interest, or the debt, in monthly instalments or a lump sum, should you wish to. By doing so, you decrease the amount owed when you pass away or when you need to move into permanent care.

Why is this good?

By reducing the amount owed on your equity release plan, your family will pay less from the sale of your home and, in turn, could receive a larger inheritance.

Find out more regarding: Getting the Right Advice for Your Needs

There Are Certain Guidelines to Moving Homes

3. Most Equity Release Products Have a ‘No Negative Equity Guarantee’

A ‘no negative equity guarantee‘ has been set by the Equity Release Council to ensure that your family is not left with equity release debt when you pass away or move into permanent care.

In a nutshell, the guarantee ensures that any additional funds owed from your equity release will be written off if they exceed the resale value of your home, even if property prices plummet.

Basically, if your house is sold and the loan, plus interest, exceeds the sale price, nothing further will be owed. If, however, there are leftover funds after the loan, plus interest, is covered, this income will go to your heirs.

Check out: How Equity Release Can Help You Leave a Legacy Whilst You Are Still Alive

The Equity Release Council is the body that regulates the equity release market. It’s vital when looking to release equity from your home to avoid any companies that are not members of the Council.

You Don’t Have to Pay Back the Cash

4. You Have the Right to Stay In Your Home

According to the rules set out by the Equity Release Council, you have the right to stay in your home throughout the course of your equity release plan.

Isn’t that fantastic?

In other words, whether you go with a lifetime mortgage or a home reversion scheme, you will be allowed to live in your house until you die or move into permanent care.

Equity Release Facts

5. You Don’t Have to Own Your Home Outright to Be Eligible for Equity Release

Great news!

You can still take out an equity release plan even if you have a small remaining mortgage. However, this might reduce the amount that you can access.

In addition, most lenders will expect you to use the funds released to pay off your mortgage, leaving you the remaining equity to spend as you wish.

Check out: Common Requirements When Taking Out an Equity Release Loan

Value Amount

Got Questions About the Equity Release Facts? Check These Out First!

Can You Lose Your House With Equity Release?

Can Equity Release be Paid Back?

Will My Children Inherit My Equity Release Debt?

Does Equity Release Affect Your Credit Score?

In Conclusion

After learning these facts, are you still wondering: “is equity release a good idea in Dec 2021?” The short answer is yes!

Equity release can be an excellent financial plan to provide UK residents over the age of 55 a stress-free retirement, if done right.

If you or your family are considering equity release, you must think carefully, weigh up all the pros and cons, and discover the pitfalls before making your final decision!

Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

rachel w

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.
john lawson profile.jpg

Written by
John Lawson
Founder SovereignBoss

John is passionate about education and has made it his life-long mission to assist UK citizens on their future financial options, with a specialist interest in equity release, and SovereignBoss is the natural extension of this passion.

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
kath icon

Katherine Read
Consumer Affairs Writer

Since joining the editorial team at SovereignBoss, Katherine has become focused on bringing transparency to finances and opportunities for those approaching retirement age. She writes on the topics of equity release, home reversion, and mortgages.

Nicola Date
Writer & Journalist

Nicola is a financial writer for SovereignBoss and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.

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