10 Common ‘Myths’ Associated With Equity Release
These are 10 of the most common ‘myths’ associated with equity release. You’ve probably heard several of them yourself…
1. I won’t own my own home any more. So I might lose it.
A surprisingly common misconception. People are regularly relieved to hear that a lifetime mortgage means they remain the owner of their home.
2. I don’t want another mortgage now. I can’t afford the repayments.
The downside of discovering that the most popular equity release product is actually a mortgage! Doubts are often dispelled once learned that no repayments are normally required until the borrower dies or goes into long term care.
3. I don’t understand how it works. It sounds complicated and I might get it wrong.
In an age of online self-service, many people will be relived to know that equity release is available only as an advised product, and that you will also need to appoint a solicitor.
4. I don’t want my children to be inheriting a debt.
The ‘No Negative Equity Guarantee’ invariably comes as a pleasant surprise to people with little prior knowledge of equity release products.
5. I wont be able to leave anything to my children or grandchildren.
We encourage good communication between family members before someone opts for equity release. This give potential beneficiaries the chance to clarify their true priorities. There is also the options to take up an equity release product with built in equity protection to provide an ‘inheritance guarantee’.
6. I don’t want to be dealing with companies I can’t trust.
Not all equity release providers are likely to be unfamiliar – people will frequently have the option of dealing with a name they already know. You may also draw comfort that all providers must be authorised by the Financial Conduct Authority (FCA, formerly the FSA), and many are members of the Equity Release Council.
7. What id my circumstances change? I don’t want to get saddled with early repayment charges.
Early repayment charges can indeed be expensive, but in some circumstances they won’t apply. Options such as voluntary partial repayment have greatly enhanced the flexibility of equity release products.
8. I’m worried doing this will affect my benefits.
This can be an issue – and although you can be reassured that your State Pension and Disability benefits wouldn’t be affected, other means-tested benefits may be. You adviser my direct you the Benefits Agency, Citizens Advice Bureau or Local Authority to discuss in more detail. Also please note even though the funds released are not taxable, your tax position my be affected but again your adviser will work with you on this.
9. I might not want to say here forever. Wouldn’t equity release tie me down to this house?
Again, many people are surprised to learn that portable equity release products are available, depending on a number of criteria including the value of the house you may be moving into.
10. Won’t it cost a fortune?
Definitions of ‘a fortune’ vary dramatically person to person, but there’s no denying that equity release can be expensive. It is important to understand how the interest on a lifetime mortgage keeps on compounding, and how the debt can grow over time. All of which your adviser will explain and answer any questions you may have.
For more information please call 01342 826 741, email email@example.com or complete our online enquiry form and a fully qualified and regulated Mortgage Adviser will be in touch to discuss everything in more detail.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of Fordyce & Playle Limited. All comments are made in good faith, and neither Fordyce & Playle Limited nor the author will accept liability for them. No advice is given in any posting. Please contact your Financial Adviser for more information or advice.