Could a few equity release myths be preventing you from making the most of the value tied up in your home?

In the current economic climate, around 61% of households in the UK are falling short when it comes to retirement savings.¹

Is there truth in the negativity surrounding equity release or is it a product worth considering?

Our research team of equity release researchers has put together this comprehensive guide to busting equity release misconceptions in 2025.

Let’s find out if there’s any truth to these equity release myths.

Myth #1: I'll Owe More Than My Home Is Worth

You won't owe more than your property's value with the modern products offered by Equity Release Council member.

The council’s mandated no negative equity guarantee² ensures you'll never owe more than the value of your home. 

In a nutshell

Your lender will cover any extra debt if it surpasses the eventual sale value of your home.

Myth #2: Equity Release Is Unregulated

Equity release is regulated by the Financial Conduct Authority (FCA)³ in the UK. 

It also adheres to the strict standards set by the Equity Release Council,⁴ guiding the principles of safety and transparency.

Myth #3: I've Got a Mortgage, so I Can't Release Equity From My Home

It’s untrue that you can’t get equity release if you have an existing mortgage on your home.

However

You must have sufficient equity to cover and fully repay your mortgage costs since you can’t have 2 charges secured against the same property.

The remaining equity release can then be used for other purposes.

Myth #4: Equity Release Is Always an Expensive Way to Borrow

While equity release can have higher rates than some traditional loans, it's not always the most expensive option because of its flexibility. 

You don’t need to repay the loan or compound interest at all in your lifetime.

However, customised plans give you the option to make voluntary interest repayments to stop it from compounding, ultimately reducing your final debt. 

Myth #5: I Won't Be Able to Leave My Loved Ones an Inheritance

You can leave your loved ones an inheritance when releasing equity by offering them other assets or opting for an inheritance protection⁵ on your loan.

Some plans have the option to set aside a portion of your estate to ensure your family is left with an inheritance when you pass away.

Myth #6: My Home Will No Longer Belong to Me

It’s untrue that your home will no longer be in your name if you opt for equity release, as long as you choose a lifetime mortgage. 

In such cases, your and/or your partner’s name will remain on the property title deed.

On the other hand

You’ll sell all or part of your home to the lender if you select a home reversion scheme.

By doing this, you’ll either relinquish ownership of the property or become a co-owner of it. 

Myth #7: I'll Be Required to Make Monthly Payments

You won’t be required to make monthly repayments with a lifetime mortgage equity release, but you have the option to do so voluntarily.

The loan and the accrued interest only need to be repaid once you move into care or pass away.

Myth #8: I Can Only Take Equity Release as a Lump Sum

You don’t only have to take out the release equity as a lump sum, you can also choose a drawdown lifetime mortgage. 

This entails releasing an initial sum and retaining the remainder in a cash reserve accessible in smaller increments as needed.

This option can also lower the interest you'll repay, as interest is only charged on the released amount, not on that in the reserve.

Myth #9: I Could Be Thrown Out of My Home if I Take Out Equity Release

It’s a common misconception that you can be thrown out of your home if you take out an equity release mortgage. 

On the contrary

Equity release guarantees you the right to live on your property for life or until you need long-term care.

Myth #10: Releasing Money From My Home Is a Last Resort

Releasing equity isn’t necessarily a last resort. 

Equity release can be a strategic financial decision, allowing you to fund home improvements, boost retirement income or help younger family members onto the property ladder. 

Determining its suitability in your situation is best done by consulting a specialised financial advisor or broker.

Myth #11: My Partner Will Have to Move Out if I Go First

Your partner won’t have to move out if you pass away first, as long as you’ve taken out a joint equity release plan.

This ensures that the surviving partner can stay in the home, even if one partner passes away.

The home will then only be sold when you’ve both passed away or moved to long-term care.

Importantly

Joint equity release schemes are only obtainable if both parties are co-owners of the property. 

Myth #12: It Isn't a Safe Form of Borrowing

Equity release may have been unsafe in the distant past, but it’s now a viable financial option to consider.

Lenders operate under the oversight of the Financial Conduct Authority (FCA), and using Equity Release Council members provides additional safeguards, ensuring customer rights and interests are protected.

Take note

It's critical to seek independent advice to make sure equity release is right for your circumstances and financial goals. 

Common Questions

In Conclusion

Misconceptions can cloud our understanding and decision-making processes, making it crucial to dispel these prevailing equity release myths. 

The reality of modern equity release is much more balanced, offering a secure and regulated way to unlock the value of your home while still protecting your rights as a homeowner. 

It's crucial to bear in mind that each financial choice must be evaluated based on personal circumstances, and seeking professional advice is always recommended.

As the years go by, the ERC continues to make an immense effort to further safeguard equity release products. 

As we've seen, many of the equity release myths are just that – myths, and understanding the truth behind them is the first step towards making an informed decision about whether equity release is right for you.