The myths of equity release debunked

This content was reviewed and approved by Amy Fletcher.

Here are some of the common myths of equity release and what the reality is – letting you choose what’s right for you.

Equity release can be a helpful financial option for homeowners later in life, but it’s often misunderstood and quite confusing for a lot of us.

With so much conflicting information, it’s easy to feel uncertain about what’s fact and what’s fiction – making you feel uneasy when it comes to deciding your future.

In this article, we’ll unpack some of the most common myths surrounding equity release — helping you make informed decisions with confidence and clarity.

Equity Release Myths Debunked

When deciding on your financial future, it’s important not to get lost in the noise.

Here are some of the common myths of equity release and what the reality is – letting you choose what’s right for you in your retirement.

1. “I’ll lose ownership of my home if I take out equity release"

There’s no need to worry about losing your home because of equity release.

If you choose to take out a lifetime mortgage (one type of equity release), you’ll still be the legal owner of your home, and everything will still be in your name.

If you’re worried about mortgage problems or unable to meet repayments, don’t panic. There are no required repayments, and the loan and interest are only paid off when you pass on or move into long-term care — this is usually paid by the sale of your house.

It’s quite common that people confuse lifetime mortgages with home reversion plans — a type of equity release where you sell all or part of your home in return for lump sum cash, which can mean you lose ownership in some cases.

If you’re worried about losing your home, it may help to know that the Equity Release Council sets rules to protect you — rules that LV= follow.

The Council is a voluntary organisation that ensures its members — including financial advisers and equity release providers — follow high standards of professionalism, integrity, and transparency.

One key rule is that you have the right to stay in your home for life — or until you move into long-term care — as long as it remains your main residence, and you follow the terms and conditions. You’ll also remain the legal owner of your home until it’s sold to repay the loan.

2. “Equity release is only for people who are struggling financially"

While equity release can provide a financial lifeline for some, it’s by no means limited to just those in financial difficulties.

In fact, many people choose equity release to enhance their lifestyle, support family, travel, make home improvements, or simply enjoy retirement more comfortably.

It’s also increasingly used as an option for smart financial planning, like managing tax liabilities and supplementing pension income.

Equity release can be a strategic choice, not just a last resort. But don’t worry, you don’t need to work this out yourself, a financial adviser would take you through all the options to get the best outcome for your circumstances.

3. “I won’t be able to leave an inheritance to my family"

Equity release can actually give you the means to pass inheritance to your loved ones – and even enjoy it together.

While it’s true that taking out equity release reduces the value of your estate (because of the associated loan and interest), it doesn’t mean your loved ones can’t benefit.

Many people use equity release to gift money to their loved ones now, helping them get on the property ladder, easing the burden of student loan debt, or gifting for life events like weddings or birthdays. Giving inheritance from your equity release means you see how it impacts your family and friends – even letting you enjoy those precious moments with them.

This method of gifting inheritance may not be for everybody. You can instead choose to protect a portion of your home’s value for inheritance with some equity release products. The amount you can borrow will be lower, as the loan is based only on the reduced value of your property.

Keep in mind that even with this option, the inheritance you leave may still be reduced as it is based on your property value when it is sold.

4. “Once I choose equity release, I can’t change my mind"

Equity release is a long-term commitment — that doesn’t mean it’s set in stone.

During the application process, you can change your mind at any point before the money is sent to your solicitor. Even once the money is paid, you can simply repay the loan. Bear in mind that you will likely be subject to early repayment charges if you do.

If you decide to keep the lifetime mortgage, many now come with flexible features, like the ability to make voluntary repayments (without early repayment charges) or port the loan to a new home if you decide to move (subject to provider conditions).

5. “Equity release means I’ll end up in debt"

It’s no secret that lifetime mortgages and equity release plans involve borrowing money against the value of your home, with no repayments required. Because of that, interest builds over time.

Another rule set by the Equity Release Council and included by LV=, is to offer a No Negative Equity guarantee. This rule ensures that anyone that takes out an equity release product won’t owe more than the total value of their home – giving you peace of mind should you decide this is the route you want to go down.

This means you or your estate won’t owe more than your home is worth when it’s sold — even if property values fall. While the final loan amount may reduce the value of your estate, you won’t pass debt on to your family.

Need a helping hand with your equity release?

As a member of the Equity Release Council, LV= follows strict rules designed to protect you, including the right to stay in your home for life, a no negative equity guarantee, and the ability to move and take your plan with you (subject to conditions).

If you need to know more about equity release, call one of our experts today on 0800 756 8059 - they’re always on hand to help. Alternatively, you can request a call back and we can tell you about the equity release process and any important things to think about.

If you’re keen to know how much of your equity you can unlock, try our free Equity Release Calculator.