Our survey conducted in March 2023 with 2,000 UK adults has unveiled concerns and a lack of knowledge surrounding the safety and regulation of equity release. The survey sheds light on several key areas where worrying misconceptions persist, including interest calculation, the need for financial advice, negative equity, homeownership and regulation.
What did the survey find?
According to the survey results, a significant portion of respondents demonstrated misunderstandings regarding the compounding of interest payable on equity release. Surprisingly, 24% of all Brits (29% of men and 36% of London residents) and 13% of those aged 55 and above wrongly believed that interest payable on equity release isn't compounded.
This lack of understanding extended to 56% of adults overall and 70% of those aged 55 and above who were unsure about the compounding nature of interest in equity release.
Additionally, the survey found that 26% of all Brits and 26% of those aged 55 and above did not believe it was necessary to seek financial advice when considering equity release. Alarmingly, 11% of adults claimed that not seeking financial advice was "definitely true." Meanwhile, 35% of all Brits and 36% of those aged 55 and above were unsure about the need for equity release advice.
Another misconception highlighted in the survey concerned negative equity. Surprisingly, over a third of all Brits (37%) and 29% of those aged 55 and above wrongly believed that they could end up in negative equity if they pursued equity release. Furthermore, 42% of adults and 50% of those aged 55 and above were uncertain about the potential of negative equity.
The survey also uncovered misunderstandings related to living arrangements, with 16% of over 55s and 24% of all Brits believing you cannot always live in your home.
Finally, a startling 24% of those surveyed and 17% of over 55s didn’t think the equity release market was regulated, with 51% of all Brits remaining uncertain.
- 55+ true
- 55+ don't know
- All true
- All don't know
Interest isn’t compounded on equity release
You don’t need to take financial advice when arranging equity release
You could end up in negative equity, owing more than the value of your home
You can’t always live in your home with equity release
The equity release market isn’t regulated
What does the survey tell us?
Although equity release isn’t the right choice for everyone, it can play a vital role in some over 55s plans for later life. It is therefore worrying that in each of these areas, a significant portion of respondents demonstrated misunderstandings or a lack of knowledge, highlighting an urgent need for education.
These days the equity release market is tightly regulated by Financial Conduct Authority and you must receive financial advice before going ahead. As long as you choose a company that is regulated by the FCA and a member of the Equity Release Council, it is impossible for you to get into negative equity and you have the right to remain in your home until you die or move into permanent care.
Theses misconceptions and lack of awareness could be preventing people from considering equity release as a viable option to access the money tied up in their home. It is therefore important that the industry do more to educate the public about the benefits and limitations of equity release, to ensure homeowners can make informed decisions about their finances.