Every Step Financial Services

Equity Release Myths: What’s True and What’s Not?

Senior couple reviewing financial documents for equity release options

Equity Release Myths: What’s True and What’s Not?

Equity release is a powerful financial tool, but it’s often surrounded by confusion, fear, and outdated information — especially for homeowners in places like Halifax, where traditional values and cautious planning go hand in hand.

Let’s separate fact from fiction. Whether you’re considering equity release for yourself or a loved one, understanding the truth behind the most common myths can help you make a clearer, more confident decision.

Myth #1: "I’ll lose ownership of my home"

False.

With the most popular type of equity release — a lifetime mortgage — you remain the full legal owner of your home. You don’t give it up or hand it over to a lender.

What happens: The loan is secured against your property, and it’s usually repaid when you pass away or move into long-term care.

The less common option, a home reversion plan, does involve selling part or all of your property, but this is always made clear upfront and is chosen voluntarily.

Even then, you have the legal right to live in your home rent-free for the rest of your life.

Myth #2: "I could end up owing more than my home is worth"

Also false.

All equity release plans that meet the Equity Release Council’s standards include a No Negative Equity Guarantee. That means:

You (or your estate) will never owe more than your home is worth when it’s sold.

Even if house prices fall, your family won’t be saddled with unexpected debt.

This guarantee is one of the key consumer protections regulated by the Financial Conduct Authority (FCA) in the UK.

Myth #3: "Equity release is only for people who are struggling"

Not anymore.

While some people do use equity release to clear debts or boost a small pension, many use it for positive life goals:

  • Helping children or grandchildren buy homes
  • Renovating to stay in their forever home
  • Taking the retirement holidays, they never had time for
  • Supporting care needs or lifestyle improvements
  • Consolidating debts for easier financial management

The modern homeowner in Halifax is increasingly looking at equity release as a smart, flexible way to use built-up property wealth — especially with the UK’s rising cost of living.

Myth #4: "I won’t be able to move house after releasing equity"

Removal company van and movers outside a house, illustrating portability of equity release plans

Incorrect.

Most modern equity release plans are portable. That means if you want to move home in the future, you can transfer your plan to a new property (as long as it meets the provider’s lending criteria).

Some common eligibility factors include:

  • The new home must be of standard construction
  • It must be your main residence
  • The value and condition must meet lender thresholds

Some clients in Halifax choose to release equity from their current home and downsize later, using portability to maintain financial freedom.

Myth #5: "It will wipe out my kids’ inheritance"

Grandparent with grandchildren, representing inheritance planning and family wealth

It could reduce it — but not wipe it out.

Equity release will reduce the value of your estate, since the loan is repaid from the sale of your property. But many providers let you ringfence a percentage of your property value to guarantee an inheritance.

Other ways to protect inheritance:

  • Choose drawdown plans to only take what you need
  • Make voluntary repayments to reduce the total interest owed
  • Ensure your plan includes inheritance protection options

Many clients use equity release to help their family now, rather than leave a larger estate later.

Myth #6: "I won’t be eligible if I have a mortgage"

Not true.

You can release equity if you still have a mortgage — it just needs to be cleared using part of the equity release funds.

This is a common use case across the UK, especially with interest-only mortgages reaching maturity.

Example:

  • Property value: £300,000
  • Existing mortgage: £40,000
  • Equity release available: £120,000
  • Mortgage cleared using release funds; remaining £80,000 available to you

Myth #7: "It’s not regulated or safe"

Definitely false.

Equity release in the UK is strictly regulated by the Financial Conduct Authority (FCA). All reputable providers and advisors must be authorised and comply with conduct rules.

The Equity Release Council sets additional consumer protection standards, including:

  • A guaranteed right to remain in your home for life
  • A no negative equity guarantee
  • The right to move home (portability)
  • Fair and transparent advice

Advisors like Every Step Financial Services are fully FCA-regulated and provide only whole-of-market, independent advice.

Myth #8: "The interest will spiral out of control"

Not if you plan well.

Interest on a lifetime mortgage compounds, meaning it grows over time. But modern products offer tools to help manage this:

  • Voluntary repayments: You can often repay up to 10% of the loan annually without penalty
  • Fixed interest rates: Many plans lock in a fixed rate for life, giving certainty
  • Drawdown facilities: Only release money as needed, reducing interest build-up

If keeping interest low is a priority, we’ll help you choose a plan that supports flexible repayments or interest-servicing options.

Myth #9: "I’ll lose my benefits"

Sometimes true, sometimes not.

Releasing equity can affect your means-tested benefits — especially if the money you take increases your savings above eligibility thresholds.

Affected benefits may include:

  • Pension Credit
  • Council Tax Support
  • Universal Credit (if under state pension age)

However, many clients use drawdown plans to stay under thresholds. And benefits are not affected if you use funds immediately for qualifying expenses (e.g. home improvements).

At Every Step, we perform a benefits impact assessment before you make any decisions.

Myth #10: "Only certain property types qualify"

Partly true.

While most UK homes qualify, there are some limitations. Properties must usually:

  • Be in the UK and your main residence
  • Be worth at least £70,000
  • Be of standard construction (no prefab, steel frame, etc.)
  • Have a sufficient unexpired lease (typically 75+ years)

Flats, bungalows, and terraced homes can all qualify — as long as they meet the criteria.

FAQs: Busting the Myths Further

Q: Can I repay the equity release loan early? A: Yes, some plans allow early repayment, but there may be charges. Look for plans with flexible repayment terms or early repayment waivers.

Q: Is there a minimum home value for equity release? A: Typically, your home must be worth at least £70,000, though some providers require more.

Q: Can I release equity from a flat or maisonette? A: Yes, but it must meet criteria on lease length, construction type, and resale suitability.

Q: Can I apply jointly with my partner? A: Yes, but the release amount will be based on the younger person’s age.

The Bottom Line: Don’t Let Myths Hold You Back

Equity release isn’t for everyone — but it’s also not the risky, last-resort option it’s often made out to be.

The best decisions come from clear, independent, and regulated advice, tailored to your situation.

At Every Step Financial Services, we help Halifax homeowners explore their options with zero pressure, total transparency, and full FCA protection.

Book your free consultation now and get straight answers to your biggest questions.

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About Every Step Financial Services. This article was written by Every Step Financial Services, an independent, FCA-regulated financial advice firm based in Halifax, West Yorkshire. We help individuals and families make confident financial decisions across key areas such as retirement planning, savings and investments, mortgages, protection, and estate planning.

With a personal, jargon-free approach and in-depth knowledge of the local area, we’re here to support you through every stage of your financial journey.

Learn more at: www.everystepfs.co.uk

Need Expert Financial Advice? Speak to a trusted financial advisor at Every Step Financial Services today.

Every Step Financial Services Croft Myl, West Parade, Halifax, HX1 2EQ – 01422 652300 | ✉️ info@everystepfs.co.uk

FCA Regulated • Independent Financial Advice • Tailored, Local Support

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