Four Surprising Truths About Equity Release

Uncovering the Reality Behind Equity Release

Search online, and you’ll find plenty of articles talking about “myths” and “secrets” of equity release. But let’s be real—many of those so-called myths are common knowledge these days. For example, most people now know that you still own your home with a lifetime mortgage.

So, we decided to dig deeper and bring you some genuinely surprising facts about equity release—plus a few common myths that need busting! 

Truth #1: Equity Release Isn’t Just for Your Main Home

Think equity release only works for your main residence? Think again!

If you own a second home or a buy-to-let property, you might be able to unlock cash from that property too. This could be a great alternative to selling it or taking out a remortgage.

• The money you release is tax-free, just like with a standard equity release plan.
• If you still have a mortgage on the property, you’ll need to use some of the released funds to pay it off.
• Special second-home lifetime mortgages and buy-to-let lifetime mortgages are available.

So, if you’ve got another property, it could be working harder for you!

Truth #2: You Can Use Equity Release to Buy Another Property

Dreaming of a coastal retreat or dipping your toes into property investment? Equity release could help make it happen!

Here’s how:

• You can release a lump sum from your main home to put down a deposit or even buy another property outright.
• Some plans allow you to arrange equity release on the property you’re purchasing, helping you fund the entire deal.

Thanks to today’s more flexible equity release options, you have more choice than ever—whether you want a holiday home, rental investment, or just a fresh start!

Truth #3: A Bad Credit History Probably Won’t Stop You

Worried that a poor credit score means no chance of equity release? Good news: lenders usually don’t care about your credit history.

Why?

• There are no mandatory repayments, so lenders don’t need to check your income like they would for a traditional mortgage.
• Even if you have previous financial issues, lenders may only require you to clear certain debts using some of the released funds.

That said, if you have secured loans, CCJs, or an IVA, your lender might ask you to settle them either before applying or once you receive your money. But in most cases, your credit history won’t hold you back!

Truth #4: A Health Condition Could Get You a Better Deal

This one might not stay a secret for long—but if you have certain health conditions or lifestyle factors, you could qualify for an enhanced lifetime mortgage with better rates or more cash.

Common qualifying conditions include:

• High blood pressure or high cholesterol
• Diabetes
• A history of cancer, heart attacks, or strokes
• A very high or very low BMI
• Being a smoker (past or present!)

Not every lender offers enhanced terms, so an adviser can help you find one that does. If you qualify, you could unlock more money or get a lower interest rate—or both!

Four Common Equity Release Myths—Busted!

Myth #1: You Could End Up Owing More Than Your Home is Worth

🚫 FALSE!

Equity release plans must come with a no negative equity guarantee if they’re approved by the Equity Release Council. This means you will never owe more than your home’s value, no matter how much interest builds up.

Myth #2: You Won’t Be Able to Leave an Inheritance

🚫 WRONG!

Many equity release plans allow you to protect a percentage of your home’s value to leave for your loved ones. This is called ring-fencing and ensures part of your estate is guaranteed for inheritance.

With home reversion plans, you can also retain a portion of your home’s value, so when it’s sold, that amount still goes to your family.

Myth #3: You Can’t Move Home After Taking Out Equity Release

🚫 FALSE!

Equity Release Council rules protect your right to move. As long as the new property meets your lender’s criteria, you can take your plan with you.

So, if you ever fancy relocating—no problem!

Myth #4: You Can’t Get Equity Release If You’ve Been Bankrupt

🚫 NOT NECESSARILY!

If you’ve been discharged from bankruptcy, you may still qualify for equity release. Discharge usually happens after 12 months, and although bankruptcy stays on your credit file for six years, it doesn’t automatically disqualify you.

Equity Release: The Pros and Cons

Now that we’ve covered some little-known truths and busted some myths, let’s look at both sides of the story.

Want to know more? Check out our full guide on The Pros and Cons of Equity Release.

Final Thoughts

Equity release is more flexible than ever, and there’s more to it than meets the eye. Whether you’re considering it for extra cash, buying a second home, or managing debts, understanding these truths can help you make an informed decision.