"Will I lose my home?" and other equity release myths

Equity release is one of the most misunderstood financial products in the UK. A lot of what people think they know about it is either out of date — the product has changed significantly over the last fifteen years — or simply wrong from the start. Among the older homeowners I work with across Barnet, Potters Bar and the wider North London area, the same handful of fears come up over and over. Most of them either don't hold up under scrutiny or have a much smaller version of truth than the worry suggests.

Here are the myths I hear most often, addressed in plain language.

Myth 1: "I'll lose my home"

This is the one that comes up first, almost every time. The fear is that the lender ends up owning the property, or that the homeowner is somehow evicted at the end of it all.

The reality: with a lifetime mortgage — by far the most common form of equity release — you remain the legal owner of your home. The lender has a charge over the property in the same way any high street mortgage lender does, but the title deed stays in your name. You live there for life, or until you move into long-term care. Only at that point is the loan repaid, typically from the eventual sale of the property.

For couples, the loan doesn't fall due until the last of you dies or moves into care. If one spouse dies, the survivor continues to live in the home on the same terms for the rest of their life. They are not asked to repay the mortgage.

You're not selling the house to the lender. You're borrowing against it.

Myth 2: "I won't be able to repay anything — the debt will just snowball"

Older equity release products didn't let you make any repayments. Interest rolled up over the years, and the debt could grow significantly. That experience left a strong mark, and it's why this myth persists today even though the product has moved on.

The reality: modern products are much more flexible. Most lifetime mortgages on the market now allow:

• Voluntary interest payments, in full or in part — so you can stop the debt growing, or slow its growth, if you have the income to do so.
• Voluntary capital repayments of up to a set percentage each year, commonly 10% of the original loan, with no early repayment charge.

That doesn't mean you have to make any payments — a key feature of the product is that you don't have to. But the option is there, and it gives clients far more control than the old-style products ever did. Some of my clients pay all the interest each year, keeping the debt level. Others pay nothing and let it roll up. Both are valid choices for different situations.

Myth 3: "I could end up owing more than my house is worth"

This is a reasonable worry, particularly if you've heard horror stories from the 1980s or 90s when some products genuinely did leave estates with shortfalls.

The reality: every lifetime mortgage approved by the Equity Release Council comes with a no negative equity guarantee. This means that when the property is eventually sold to repay the loan, your estate will never owe more than the sale proceeds. If compound interest has grown the debt above the property's value, the lender — not your family — absorbs the shortfall.

This is one of the most important consumer protections in the product, and it's the reason I only ever recommend ERC-approved lenders.

Myth 4: "Once I take it out, I can never move again"

People worry they're tying themselves to the current property for life — which feels claustrophobic, particularly for clients in their 60s who may want to move at some point in the future.

The reality: ERC-compliant lifetime mortgages are portable. If you want to move to another property that meets the lender's criteria — downsizing closer to family, relocating to a different part of the country, or moving to a more manageable home — you can transfer the mortgage to the new property. You're not locked in.

There are conditions. The new property has to be acceptable to the lender (some property types are excluded), and if it's worth less than your current home you may need to repay part of the loan when you move. But the option is there, and it's used regularly.

Myth 5: "There will be nothing left for my children"

This is closely tied to Myth 2 — the assumption that the debt will eat up the entire estate.

The reality: how much you leave depends on three things: how much you borrow, how much interest accrues, and how the property's value changes over time. You don't have to borrow the maximum on offer — most of my clients deliberately borrow less than they could, precisely to preserve some inheritance.

Many ERC products also offer an inheritance protection guarantee, which lets you ringfence a defined percentage of your home's value that's guaranteed to pass to your beneficiaries regardless of how the rest plays out.

It's worth noting that some clients prefer to give some of the inheritance during their lifetime — using equity release to gift to children or grandchildren when the money makes the biggest difference, rather than waiting decades. Seeing your daughter buy her first home matters more than her receiving the equivalent amount in her 50s.

Myth 6: "Equity release is a last resort for desperate people"

This was once closer to the truth than I'd like. The early generation of products had a reputation problem, and they earned much of it.

The reality: today's equity release market looks very different. The product is used by a wide range of clients, including people with substantial estates, for purposes that have nothing to do with being desperate:

• Inheritance tax mitigation and estate planning
• Lifetime gifting to children and grandchildren
• Refinancing maturing interest-only mortgages
• Home improvements and adaptations to age in place
• Topping up retirement income on their own terms

It's a mainstream later-life lending tool. Not a last resort.

What is genuinely true and worth knowing

Myth-busting cuts both ways. Some things you may have heard about equity release aren't myths — they're real considerations that deserve serious thought:

• Compound interest does add up. If you take a loan and make no repayments, the debt grows each year, and over a long lifetime that growth can be substantial. The no negative equity guarantee protects against the worst outcome, but it doesn't change the maths.
• It can affect means-tested benefits. Pension Credit, council tax support and other means-tested entitlements can be impacted, particularly if you hold a lump sum or make certain gifts. This needs to be checked properly in your specific case.
• It reduces the value of your estate. This is the deliberate consequence of the product. It may well be the right trade for you, but it should be a conscious choice.
• Early repayment may carry charges. Early repayment charges vary by product, sometimes considerably. Many modern products have time-limited ERCs that fall to zero after a fixed number of years.

A good adviser will spend as much time on the downsides as the upsides. If anyone you speak to skips over the trade-offs, that's a signal worth paying attention to.

Important — please read

A lifetime mortgage is a loan secured against your home. Interest rolls up over time, which means the debt grows, and it will reduce the value of your estate. Equity release may also affect entitlement to means-tested benefits. To understand the features and risks, ask for a personalised illustration.

Could I help?

If you've been put off looking at equity release because of something you read, heard from a neighbour, or assumed from an old advert — I'd be glad to talk it through. A 15-minute conversation usually does more to clarify the picture than hours of online reading.

Call Roshan Percy — 07543 169733 for a free initial consultation

I'm a member of the Equity Release Council, fully qualified and highly experienced in lifetime mortgages and later-life lending. My advice is always grounded in your specific circumstances — never a one-size-fits-all answer.