Is Equity Release Safe?

Is Equity Release Truly Safe in 2022?
Contributors: Nicola Date, Katherine Read. Edited by Rachel Wait & Reviewed by Francis Hui
Is Equity Release Safe in 2022? Discover the Safeguards for Equity Release Plans & How It’s Regulated. Let’s Unpack This.

With more than £4.8bn in property wealth being released in 2022, you’ve likely heard of these retirement products sweeping the UK nation.

But we bet you are wondering, is equity release safe? Fortunately, we have compiled some vital information to answer this burning question.

As experts in our field, we discuss the following in this article:

    Our editorial team at EveryInvestor strives to bring you the latest market news.

    Hence, we’ve done a detailed evaluation of current safety in the industry.

    Here’s what we’ve found!

    Before You Start Reading….

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    Is Equity Release a Safe Way to Borrow?

    Yes, equity release is a safe way to borrow, as long as you unlock cash through a member of the Equity Release Council1.

    The Council has implemented a strict code of conduct that’s designed to protect the consumer. 

    Does Equity Release Offer Any Protection?

    Yes, equity release does offer protection for its borrowers. This includes:

    • The ‘no negative equity guarantee’ – ensuring you’ll never pay more on your loan than the final sale value of your property. Any additional equity release debt is written off by your lender. 
    • There’s zero risk of foreclosure – you’re granted permission to stay in your home until the last homeowner passes away or moves to a long-term care facility. 
    • Inheritance protection – you’re welcome to set aside a portion of your estate as a guaranteed inheritance that can’t be absorbed by the equity release loan. 
    • Fixed interest rates – your equity release interest rates will remain the same, no matter the state of the British economy. 
    • You’ll work with a financial adviser2 – who will guide you through the entire equity release process and help you determine if these products are the best move under your circumstances. 

    Are Equity Release Schemes Regulated?

    Yes, equity release schemes are regulated by the Equity Release Council.

    However, the Council only serves its members, so you may find some companies that don’t fall under these strict regulations. 

    Take note

    We strongly advise you avoid unlocking equity through any companies that fail to hold an Equity Release Council membership. 

    Before You Continue Reading….

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    What Safeguards Are There for Equity Release Plans?

    The safeguards for equity release plans include the Financial Conduct Authority, the Equity Release Council and the industry’s strict code of conduct. 

    Here’s more information:

    Financial Conduct Authority (FCA)

    The Financial Conduct Authority oversees and monitors the UK financial industry.

    Thanks to the FCA3, consumers’ best interests are protected and equity release is especially safe nowadays.

    The FCA also provides you with a way to take legal action against the providers who aren’t meeting the necessary requirements.

    Equity Release Council (ERC)

    The Equity Release Council (ERC) governs equity release specifically.

    It requires its members to follow a strict code of conduct, and detailed rules and regulations. So, you can rest assured that your money and rights are protected.

    The Equity Release Code of Conduct

    Members of the Equity Release Council are required to adhere to a strict code of conduct that’s designed to protect older consumers.

    The Equity Release Council is constantly updating their rules to ensure that homeowner’s needs are met.

    Great news!

    Their latest announcement is that all lenders must now offer plans with the guaranteed right to pay back some of the loan and interest.

    In addition, homeowners can stop and start these payments whenever convenient.

    By paying off the interest, instead of allowing it to compound, the overall cost of your loan will significantly reduce.

    Common Questions

    Is It Safe to Release Equity From Your Home?

    Are the Dangers of Equity Release?

    What Makes Equity Release Safe?

    Is Equity Release a Good Idea?

    In Conclusion

    When it comes to all things finance, safety is paramount. Fortunately, the equity release industry is protected.

    So, if you unlock equity through a member of the Equity Release Council, you can do so with a sound mind and the means to live a stress-free retirement.

    How Much Can You Release?

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    Editorial Note: This content has been independently collected by the EveryInvestor team and is offered on a non-advised basis. EveryInvestor 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.