Equity release is one of those financial tools that sounds simple on the surface but can raise a lot of questions the moment you start thinking about it seriously. You might hear someone say, “I took out equity from my house,” and that’s it. But what does that really mean?

What happens to your home, your family, and your money afterwards? You may also hear some things that aren’t fully accurate. This article breaks down four common myths about equity release, explains what’s actually true, and shows how this option works in real life. Here are the 4 little-known truths about equity release that you must know:

Truth #1: Your Children Won’t Be Left in Debt

Here’s a worry many people have. They imagine taking out equity might mean their children will be stuck paying back a huge amount if something goes wrong. This fear is easy to understand. You work hard your whole life, and the last thing you want is to leave your loved ones with a burden.

Now for the truth: as long as you choose a provider that follows the right rules, your family will never owe more than the value of your home.

How? It comes down to something called the no negative equity guarantee. This is offered by lenders that are members of the Equity Release Council. It means if the amount owed ends up being more than what the home sells for, the difference is written off. Your family doesn’t pay it. Let’s say you took out a lifetime mortgage. That’s the most popular form of equity release.

You stay in your home, borrow money against its value, and nothing has to be paid back until you pass away or move into long-term care. When that happens, the house is usually sold, and the money from the sale repays the loan and interest. Anything left goes to your family. If the home sells for less than the debt, the lender takes the loss and not your children. So yes, equity release does reduce what your family inherits. But it won’t ever put them in debt.

Truth #2: A Lifetime Mortgage Doesn’t Mean You Lose Ownership

Some people believe that if they take out equity release, they’re handing over ownership of their home. That’s not how lifetime mortgages work. In a lifetime mortgage, you’re not selling the house, but you’re borrowing money using it as security. Think of it as a reverse mortgage, with more flexibility. You stay the legal owner of your home for the rest of your life or until you move into long-term care. Nobody can kick you out. This is different from a home reversion plan, where you do sell a part (or all) of your home to the provider.

In return, you get tax-free cash and the right to stay in your home until the end of the plan. The provider gets their share of the sale value when the house is eventually sold. With lifetime mortgages, you’re just taking out a loan. Yes, the debt grows over time unless you decide to pay the interest, but the property still belongs to you. And if your family wants to keep the home after you’re gone? They can repay the loan themselves and keep it, if they choose to.

Truth #3: Joint Plans Don’t Put One Partner at Risk

This is another concern many people bring up. What if you take out equity release as a couple, and one of you goes into care or passes away? Good news! Joint equity release plans are designed to protect both partners. The plan only ends when the last surviving partner either passes away or goes into long-term care. Let’s say a married couple takes out equity release. If the husband needs to go into care, the wife can stay in the home as long as she likes.

The lender can’t ask for the money back while one partner is still living there. Even when one partner passes away, nothing changes as long as the other is still living in the home. The debt isn’t due until the last person moves out for good. Of course, you’ll want to check the fine print. But if you’re dealing with a proper lender and the plan is set up right, this kind of situation is covered.

One thing to keep in mind: if one partner does go into care, it might affect means-tested benefits. That’s why it’s worth getting proper financial advice before signing anything.

Truth #4: You Don’t Have to Take All the Money at Once

Here’s something not many people realise. You can use equity release to get money gradually, not just in one big chunk. There’s a type of lifetime mortgage called a drawdown plan. It lets you take an initial amount when you start and then pull more out later when you need it. This is useful for people who don’t need all the money right away. Maybe you want to start with a little to pay off a loan, and later you might need more for medical costs, family support, or home repairs.

Here’s the best part: you only pay interest on the money you’ve actually taken. So if you’re careful with how and when you draw down funds, the total interest owed can be much less. Let’s say you’re approved for £80,000. You take £20,000 to begin with. You’ll only be charged interest on that £20,000. If you never touch the rest, you don’t pay anything on it. That’s how flexible it can be.

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In Simple Words

Let’s put this in plain words:

• You won’t leave debt behind for your kids, as long as your plan includes the no negative equity promise.
• You still own your home with a lifetime mortgage.
• If you’re part of a couple, your home is safe until both of you move out permanently.
• You can choose how to receive the money, either all at once or in smaller parts.

Conclusion 

These things can give peace of mind. Still, equity release isn’t for everyone. It’s a big decision, and it changes what happens to your estate later. That’s why talking to a financial adviser is important. Not someone trying to sell you a product, but someone who can explain the details honestly and clearly

If you’re thinking about equity release, speak to someone who understands the latest plans and what works best for your needs. Whether you’re considering retirement plans, helping your children, or just making life a little easier, the more informed you are, the better your decisions will be.