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Is equity release safe?

First of all, make sure you choose a provider you can trust and rest assured, The SunLife Over 55 Equity Release Service is here to help. Let’s take a closer look…

Did you know that an equity release plan is taken out every 15 minutes in the UK? If you find yourself with equity in your home but limited cash for retirement, equity release could be a way to generate the income you need. That’s because it lets you unlock the value tied up in your home as a tax-free lump sum or a regular income – so you don’t have to downsize to get hold of the money.

If you still have a mortgage, the money you release will pay this off first. Then, any remaining cash is yours to spend as you wish – whether you want to make everyday life more comfortable, improve your home, or lend your family a hand. There are no monthly repayments to worry about either – instead the loan and rolled up interest are paid back when your home is sold, which is usually when you pass away or move into permanent care. You can read more in our equity release guide.

Even though equity release is booming, there are still some common myths around, which leaves some people asking: how safe is equity release? Well, we’re here to talk about some of the concerns you might have to help you make up your own mind.

Here are 5 reasons why a lifetime mortgage (the most popular type of plan) is considered to be safer than in the past...

1. It’s fully regulated

Unlike unregulated equity release plans of the past, today’s equity release market is regulated by the Financial Conduct Authority (FCA). This should give you valuable reassurance.

For extra peace of mind, there’s also a dedicated industry trade body: the Equity Release Council (ERC). It represents providers, qualified advisers, intermediaries and surveyors who work in the sector – and all members have to adhere to the Council's Statement of Principles, which are there to provide important safeguards for you.

Because our preferred partner, Age Partnership, are members of the ERC, you know you’ll be protected every step of the way. You’ll find out more about their rules and protections as you read through this article.

How does equity release work?

house keys in the lock of a green front door

2. You’ll never leave your family in debt

With a lifetime mortgage approved by the ERC, the ‘no negative equity guarantee’ is also there to protect you. No risk of negative equity means you’ll never owe more than the value of your own home – and you could never saddle your family with any debt. So if that was something you were concerned about, there’s no need to worry.

Even if your property was to decrease in value significantly, and selling it wasn’t enough to repay your plan in full, any remaining debt would just be written off when you pass away or move into long term care. That’s another load off your mind.

The A to Z of equity release

hands protecting a chalk drawn house from the elements on a blackboard

3. You still own your own home

Perhaps you thought that equity release means you’ll no longer own your own home. But with a lifetime mortgage, that simply isn’t the case. You won’t have to sell any part of your home in order to access the money you need – you’ll just be borrowing against the equity, because a lifetime mortgage is a debt secured against it. As such, you can continue to live and own your own home. It’s as simple as that.

According to the ERC rules, when you take out equity against your home, if both you and your partner are on the contract, you are guaranteed to remain the sole owners until you both pass away, or you both go into permanent care. It means you’ll have the right to live there as long as you want – and you can rest easy knowing you’ll never be forced to move.

How much equity could you release?

ariel view of a mature couple reading together on the sofa

4. You’re free to move house

Taking out an equity release plan doesn’t necessarily mean you’ll be tied to your current property forever (unless you want to be, of course). If your circumstances change, you should have the flexibility to move house if you need to.

The ERC gives you the right to take your equity release plan with you, as long as you’re moving to a ‘suitable alternative property’ – meaning somewhere that meets the lending criteria of your equity release provider. It’s worth bearing in mind that if you were to move to a less expensive place, you may have to repay some of the amount you owe.

Types of equity release plan

couple talking to an adviser outside of a house

5. You can still leave an inheritance

Because equity release loans (and the interest) are repaid when your home is sold, it does mean you won’t be able to leave your home as an inheritance. But if there’s anything left over after everything’s been paid off, it can go to your estate (as per your will).

If you want to absolutely guarantee an inheritance for your loved ones, there’s a way to do it. When you set up your equity release plan, you can choose to ringfence some of the value of your home. Just make sure you let your adviser know, so they can find an equity release plan that meets your needs.

Don’t forget – some people even use equity release to give an early inheritance. Whether your children need a mortgage deposit or you’d love to lend a hand with their wedding, you could see them enjoy their money during your lifetime. Of course, you should always consider your own financial position and seek advice before giving money away.

How to help the family with equity release

extended family hugging and smiling together into the camera

Is equity release a good idea?

You can rest assured that you’re in good hands with a trusted equity release partner. And the SunLife Over 55 Equity Release Service is here to help you get what you need.

As for whether equity release is the right thing for you, that depends entirely on your circumstances. If you’re a homeowner aged 55 or over, you could be eligible for equity release. And if you’re asset rich but cash poor, it could be a great way to boost your income in later life.

That said, it’s important to consider other avenues first, including using your savings and downsizing to a smaller, cheaper property. It’s also worth bearing in mind that equity release may reduce the inheritance you leave, and it can affect your eligibility for state benefits.

Get the advice you need

Before making any final decisions, it’s important to make sure you understand what’s involved and whether equity release is right for you.

With this in mind, you should always seek professional advice from an independent expert adviser, who’ll talk you through the details, and you can ask as many questions as you wish. When you’re ready, The SunLife Over 55 Equity Release Service is here to help you on your way.

Whenever you’re ready, we’re here for you

For more information and to check your eligibility, call The SunLife Over 55 Equity Release Service today on 0800 633 5566 or request a call back.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife? 

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Phoenix Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is entered on the Financial Services Register (registration no. 110418). As part of SunLife’s commitment to quality service and security, telephone calls may be recorded.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

The funeral services are arranged and provided by Dignity Funerals Ltd which is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.