You’ve probably heard of no negative equity guarantee but do you know what it entails?

Are you concerned about your family owing more than they can afford on your equity release plan when you pass away or enter long-term care?

Fear not; the Equity Release Council has your back.

Our goal at SovereignBoss is to simply explain equity release terminology, including laws set out by the Equity Release Council.

Let’s find out now!

What is the No Negative Equity Guarantee with Equity Release?

The no negative equity guarantee is a clause that must be included in all equity release plans by the Equity Release Council members.

This ensures that your family will never owe more than the sale value of your home when you die or enter long-term care.

How Does It Work?

A no negative equity guarantee works by ensuring that you never owe more than the value of your estate.

You’re not obligated to make any payments with an equity release mortgage until the property is sold, usually when you pass away or enter a care home.

At this point, your equity release lender is repaid the money you’ve borrowed and all of the interest you’ve accumulated over the years. This is usually done so from the sale of your property.

What happens if I owe more than my home is worth?

The ‘no negative equity guarantee’ protects you against a scenario where you owe more than your home is worth,

If the figure turns out to be greater than the market value of your home when it is sold on the open market.

However, in the event of a sale where the equity owed outweighs the sale amount, the total purchase price will be reimbursed to the equity release company.

There will be nothing left in your home for future generations.

If you don’t want the interest to grow, you may choose to make interest payments regularly rather than allow the outstanding amount to rise as it rolls up.

Common Questions

In Conclusion

Since their formation in 1991,

Members of the Equity Release Council have focused immensely on eradicating corruption in the equity release industry and protecting consumers.

The ‘no negative equity guarantee’ is a perfect example of their commitment to being customer-focused.

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