Equity release is a type of lending that’s generally only available to people aged over 55. It involves people borrowing money against their home – so they can access the money that’s tied up its value without moving out.
Because of the way interest is added over the years, people can end up owing significantly more than they borrowed. But if everything goes to plan, the money only needs to be paid back after the borrower (or borrowers) dies or goes into care.
As part of releasing equity, people are often advised to discuss their plans with their family. But they may choose not to – meaning it comes as a shock to their loved ones that they owe thousands of pounds. In fact, two in three complaints we get about equity release come from relatives of people who’ve died or gone into care.
Money’s not always easy to talk about. But I’d really encourage people to have honest conversations with their family. It could save a lot of upset later on, when you’re not able to explain your decisions.”
To release equity, you can take out:
a lifetime mortgage – where people borrow a percentage of the value of their home, with interest added over the years.
a home reversion plan – where people sell a percentage of the value of their home to a company, who get the same percentage of the proceeds when it’s sold.
People can take the money as a lump sum, a regular income or both. Some products may come with a “no negative equity” guarantee, meaning people won’t ever owe more than the value of their home when it’s sold.
Another type of lifetime mortgage – “shared appreciation” mortgages – aren’t sold any more. We can’t usually look into complaints about these, because the businesses involved weren’t regulated.
If you can’t find what you’re looking for here – or you’d like to talk to someone – give us a call ...
consumer helpline - 0800 023 4567
our technical advice desk (for businesses and consumer advisers) – 020 7964 1400
Our regular newsletter for people interested in financial complaints, and how to settle or prevent them.
Available to read online and also on: