Clearing the confusion around equity release

Find out more about this financial product that could give you the golden years you deserve. 

Equity Release continues to soar in popularity across the nation, as more and more over-55 homeowners are turning to their property wealth to boost their later life finances. Already in the first half of 2018, we have seen a 64% annual increase in the amount released, and helped customers unlock an average of £78,580 from their homes.1

However, despite this growth, confusion still surrounds this industry. Recent research has indicated that as little as 11% of homeowners aged 55 or over fully understand how it works.2

At Responsible Equity Release, we believe that Equity Release can provide important financial security and opportunity to some of the UK’s later life homeowners. That’s why we’re keen on spreading as much knowledge about the industry as possible. Below, we’ve busted 5 of the biggest myths that still surround equity release.


Myth 1: You no longer own your own home

Contrary to popular belief, taking out a lifetime mortgage does not affect the ownership of your home. Your home remains your own for life. The mortgage, plus the interest accrued, only gets repaid once the property stops serving as your primary residence – when you move into long term care for example.


Myth 2: The money you release is subject to tax

Despite what as many as 55% of respondents in the above report believed, the money you release from your home is tax-free. It can be spent however you see fit, from providing an early inheritance to your family to travelling the world.


Myth 3: You can end up owing more than the value of your home

This is completely untrue. The ‘No Negative Equity Guarantee’ ensures that your estate will never owe more than the value of your property when it is sold. Once the property ceases to be your primary residence and is sold, the sale proceeds are used to pay off the lifetime mortgage and any interest that has accrued. Once the loan has been repaid, any remaining funds will be paid to you or your estate.

In the unlikely event that the property sells for less than the amount of the loan, the remaining balance will be written off.


Myth 4: You can’t release equity from your home if you have an outstanding mortgage

False. You can still release equity from your home if you have an outstanding mortgage, provided that the tax-free funds you release or other savings you have are used to pay off the outstanding mortgage balance. In fact, clearing an existing mortgage balance is one of the most popular uses of a lifetime mortgage.


Myth 5: You must make monthly repayments with a lifetime mortgage

Despite the name, a lifetime mortgage features no required monthly payments. As with any other borrowing, an interest rate is charged. Any interest you choose not to pay is simply added to the total and paid when you or your heirs eventually sell the property. However, should you wish, some plans allow you to make voluntary, penalty-free payments of up to 10pc per year of the amount you borrowed.


It is important to consider that a lifetime mortgage may reduce the value of your estate, and the tax-free cash you receive may affect your entitlement to means-tested benefits. Your advisor will provide you with a personalised illustration of the features and risks to you.

If you think that your golden years could be given a shine with a tax-free cash boost, then why not use our free online calculator to see how much you could release from your home? 

Find it here:

Could equity release help you? Call us now and speak to one of our expert team who will give you all the information you need.

0800 652 2955

Latest News

Equity Release Articles

  • Are You Considering Downsizing to Release Equity?
  • Being the ‘Bank of Mum and Dad’
  • Compare Equity Release Schemes
  • Defy the SPA Extension with an Equity Release Plan
  • Do High Street Banks such as TSB, Natwest and Santander etc., do Equity Release?
  • House Price Increase; Great News for Lifetime Mortgagers, Bad News for First Time Buyer
  • How Do I Release Equity From My Home?
  • How does Equity Release work?
  • How much equity can I release?
  • The Responsible Equity Release Jargon Buster
  • What are the Pros and Cons of Equity Release?
  • What is a Lifetime Mortgage?

  • The savings you never knew you had

    Responsible Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register ( under reference 610205.

    This is a Lifetime mortgage which may reduce the value of your estate and may affect your entitlement to state benefits. To understand the features and risks ask for a personalised illustration.

    Any information contained herein is a personal opinion of the author and should not be considered to be advice of any kind. Inheritance Tax planning is not regulated by the FCA. Think carefully before securing other debts against your home. By consolidating your debts into a mortgage you may be required to pay more over the entire term than you would with your existing debt.

    Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,490. Our adviser will talk through the setting up costs of a lifetime mortgage before you make any decision to proceed.