Is equity release safe?

Compare Equity Release

Checked for accuracy and updated on 27 June 2023

We appreciate that taking out an equity release plan is a big step. After all, our home is our sanctuary, our haven of safety, and, for many, our biggest asset.

That’s why our patient and experienced advisers provide quality advice from the whole of the market, with no pressure. If we don’t think an equity release plan is right for you, we will say so. It’s that simple.

As quality advice is central to Equity Release Supermarket, you can be certain that you won’t be forced into making any decisions that aren’t right for you or your family.

Let’s explore some of these safeguards.

Equity Release is regulated by the Financial Conduct Authority (FCA)

The FCA, the financial services watchdog and regulator in the UK, oversees the equity release market.

In the equity release market, this means that all lenders, brokers and advisers must have the permission (authorisation) of the FCA to lend and/or give financial advice. They must also follow the FCA’s strict codes of conduct. In addition, being regulated by the FCA means that consumers have adequate and appropriate protections in place.

The Equity Release Council

The Equity Release Council is the industry’s governing body and, as such, it insists that its members follow a strict code of conduct which is designed to protect consumers. These safeguards include:
• You must receive financial and legal advice.
• That all products must have a ‘no negative equity guarantee’ – which means that your loved ones will never repay more than the value of your home.
• That you can stay in your home for life.
• That all those taking out equity release have at least one face-to-face meeting with an independent solicitor.

So, if you are considering equity release, make sure that your lender or broker is a member of the Equity Release Council; which Equity Release Supermarket has been for many years.

You must receive financial advice

Equity release is an advised financial product, which simply means that you cannot take out a plan without having taken appropriate financial advice from a suitably qualified professional.

Advisers must have taken special qualifications to become equity release advisers and if you are unsure if your adviser is one of them, the Equity Release Council has a member’s directory on its website where you can check.

Rest assured that all the Equity Release Supermarket’s advisers are listed as qualified members of the Equity Release Council.

Your solicitor is involved

As mentioned above, you must see an independent solicitor at least once during the equity release process.

While they cannot give you financial advice, your solicitor will ensure that all your paperwork is in order and aim to ensure that the process runs smoothly and there for your protection.

The flexibility of equity release

Equity release offers safeguards that traditional mortgages don’t. Most plans don’t require repayments and, as such, you cannot get into arrears, default or have your home repossessed for non-payment.

As the market evolves, many of the latest products offer greater flexibility and choice, such as:
• Plans with fixed interest rates for life, meaning you'll always know how much you must repay in the future.
• Fixed early repayment charges, knowing exactly what the penalty may be, if you wish to repay your plan early.
• Plans allowing you to make ad-hoc voluntary payments which could help to manage the future balance.
• Compassionate early repayment charge, allowing penalty-free repayment of a plan within three years of a partner dying or moving into long-term care.
• Downsizing protection features ensure you can repay your equity release scheme penalty free if you move home after 5 years from inception of the plan.

What are the pitfalls of equity release?

While equity release has helped many people to enjoy financial freedom, there are downsides which you should be aware of.

Equity release will reduce your estate to pass onto your loved ones as an inheritance, but this can be minimised in different ways.

With so many plans and options available, it’s vital that you speak to an impartial, expert adviser, who will search the whole of the market to find the plan that meets your individual needs. Get in touch with Equity Release Supermarket today and we can do just that.

Download our factsheet to find out more about the ways that you are protected.