No Negative Equity Guarantee

Wondering What Exactly is the No Negative Equity Guarantee? Find Out Here

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What Is the No Negative Equity Guarantee?

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.

In this article, we’ll have you discover:

  • What’s a ‘no negative equity guarantee’?
  • How it works.
  • What happens if you owe more than your home is worth.

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

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.

Discover: Whom Are the Equity Release Council & What Do They Do?

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.

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.

Are you wondering how much cash you can unlock with our free equity release calculator? Try it right now!

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.

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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.
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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.
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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.
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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.
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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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As Featured In
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