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Are Lifetime Mortgages safe?

“Are lifetime mortgages safe?” This is a common question among customers seeking advice on how to manage their later-life finances. Over the years, equity release misinformation and scare stories have circulated, resulting in 15% of UK homeowners claiming that they don’t understand equity release. While it is true that some borrowers in the 1980s were mis-sold home income plans and ended up owing more than their homes were worth, the equity release market has undergone significant changes and improvements over recent decades which has made it safer than ever.

As long as the equity release product and lender are regulated by the Financial Conduct Authority (FCA) and Equity Release Council (ERC), you can be confident that it is safe.

The most popular equity release product in 2022 is a lifetime mortgage, with most lifetime mortgage products offering features that safeguard you as a customer and provide greater flexibility.

These features include:

No Negative Equity Guarantee

As part of the Equity Release Council’s Product Standards, lifetime mortgage products come with a No Negative Equity Guarantee, which ensures that you and your beneficiaries will never owe more than your property is worth when sold.

Inheritance Protection Guarantee

Many lifetime mortgages on the market now offer an inheritance protection guarantee, which enables you to protect a portion of your property’s value that you can leave behind as an inheritance for your beneficiaries.

Senior woman sitting with granddaughter at table colouring in drawings

Partial Capital Repayments

Most lifetime mortgage plans have an optional partial repayment feature, which allows you to repay up to 10% of the total amount borrowed in any 12-month period without paying an Early Repayment Charge.

We understand that you likely have a lot of questions regarding lifetime mortgages and their features. We answer some of your frequently asked questions here.

You can find out if equity release is right for you and your personal circumstances without it costing you a penny by contacting our equity release advisers on 07809 715 243 for an informal chat.