Equity Release Reviews 2022
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Learn what people think about lifetime mortgages and specific equity release companies with some equity release reviews.
We take a look at some generic and company-specific equity release reviews so you know more about these products and what to look out for. Let’s start with a quick recap on how equity release really works.
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What is equity release and how does it work?
Equity release is a method of borrowing against the equity in your home, but unlike a home equity loan, it is only available to senior homeowners above the age of 55, and possibly only those below the age of 85.
Equity release can either be from a lifetime mortgage or a home reversion plan. Although these loans are different, they both do not ask the homeowner to repay the loan through monthly repayments. Instead, the equity loan is repaid after the homeowner dies or moves into care, at which time their home is sold and some of the sale proceeds are used to repay the debt.
This makes equity release an option for those who want to access a lump sum or drawdown loan without having to worry about monthly repayments. It can be a great way to fund retirement and home improvements in later life.
You must speak with an independent financial adviser before committing to an equity release scheme. And the lender you choose must be authorised and regulated by the Financial Conduct Authority.
Equity release eligibility criteria
To qualify to apply for a lifetime mortgage or home reversion equity release scheme, all homeowners must be at least 55 years old and possibly below the age of 85 depending on the lender.
The property that you want to release equity from must not have a residential mortgage or other loan attached. And it must be your main home as opposed to a holiday home or rental home. In some cases, the lender may demand that the property is worth more than a certain valuation.
Once you apply the lender will complete checks on the property using surveyors. They will look at how it was built and what materials were used. They’ll also assess the roof in detail and any risk of flooding. Even if you qualify to apply, the lender could still reject your application.
Is equity release a safe option?
Equity release is a legitimate and safe way of borrowing money in later life as long as you use a lender that is regulated by the Financial Conduct Authority. Moreover, it is highly recommended that you only take financial advice from, and consider lenders, that are members of the Equity Release Council. This affords you additional protection and assurances.
What is the catch with equity release?
There should be no catch with equity release because your adviser should have explained the full costs and implications of using a lifetime mortgage or other plan.
However, some people still consider the catch to be how expensive these loans can become. Even though you may not pay back monthly, the amount you end up paying back after death or moving into care can be more than double the initial loan value. This significantly eats into your estate and any inheritance you leave behind.
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Lifetime mortgage or home reversion plan?
As explained earlier in this guide, there are two products that provide equity release for seniors. These are the popular lifetime mortgage, and the slightly less popular home reversion plan.
When you have a lifetime mortgage, you receive a loan and pay interest on it. Only the interest is not required to be paid either, so the interest amount gets added to the loan debt each month, making it grow bigger. Whatever the total debt is by the time you die or move into long-term care, this amount is taken from the sale proceeds of your home.
Whereas a home reversion plan does not charge interest on the loan. The lender requests a certain percentage of your future property sale, and this percentage is usually double or more the percentage of equity you take out. For example, you may take 30% equity as a lump sum, but in return must give the lender 70% of your property’s future sale proceeds.
Equity release schemes reviews – what are people saying?
There is a lot of talk about equity release products online. Here are what some people have been saying on the MoneySavingExpert forum:
“Be wary of equity release. It is a high risk area (for advice) and it is on the list of areas that has the potential to be a mis-selling saga.”
Of course, you should be selective on the financial advice you receive as you consider a lifetime mortgage. There have been many instances of advisers, especially those who work directly for lenders, mis-selling lifetime mortgages. This might be because the adviser has not fully explained the costs, or because they have not explored alternative solutions for the client. Thankfully, the industry has a better reputation today. And it is best to use an adviser that is a member of the Equity Release Council.
“High fees and higher rates- a way of the lenders finding a new market for profits. That said if you want to spend your equity- that’s your choice, just be careful. Use a financial adviser who has obtained the new specialist FSA authority for this “lifetime mortgage” area.”
This forum user is warning others against the high cost of equity release, including set-up costs and the actual cost of eventually repaying the loan. They also stress the importance of finding the right financial adviser as part of the process.
“My parents took an equity release in 2006 and the interest rate is 6.2%. Whilst the amount of equity released was minimal the amount owed is now quite substantial.”
Here we have another forum user with a first-hand example of how expensive lifetime mortgages can become due to the rolling interest. For example, if you were to take out £65,000 in equity with a 6.4% interest rate, after just 12 years of your lifetime mortgage, the new debt would be almost £137,000.
What are the benefits of equity release?
There are pros and cons of using equity release. The pros are as follows:
- You receive a lump sum or drawdown loan with no repayments required
- The loan can be spent as you wish
- The loan is not subject to any tax
- You make no repayments and continue living at home.
- You can volunteer monthly repayments of your choice to mitigate the debt
What is the downside to equity release?
The downside to equity release is the cost to pay off the loan in the end, and the impact this has on your estate. But there are a couple more drawbacks to using equity release, such as:
- Early repayment charges – these can be high because these loans are expected to last for life.
- Means-tested benefits – increasing your wealth can make you ineligible for some means-tested state benefits.
Equity release company reviews
There are a lot of equity release companies to choose from in the UK, so making that decision can be difficult. Some of the most popular companies are More 2 Life, LV, Pure Retirement, One Family, Aviva and Nationwide Bank – among some other banks that also offer these products.
You should be checking out what people say about these companies before applying. To give you a headstart on some of these companies, we’ve been searching for real reviews on their clients. Here’s what they had to say:
- Pure Retirement
Pure Retirement only has three reviews on Trustpilot and all of these reviews are negative. However, the reviews stem from unhappy applicants that have had their applications rejected due to the reports from surveyors. For example:
“We had an equity release mortgage refused on the basis of a flawed surveyor report [..] we may have to spend large amounts of money refuting the erroneous claims.”
Although we cannot comment on whether the report was accurate or not, this is typical of Pure Retirement, which is extremely cautious in their approach to providing equity release – and is not a bad thing. This equity release provider only offers lifetime mortgages to clients who apply through independent financial advisers.
- More 2 Life
More 2 Life is another company that specialises in equity release. At the time of writing, they have over 330 equity release reviews on Trustpilot with an overall rating of 4.3 stars. This suggests that most clients are happy with the service and deal they have received. Here are some of the most interesting comments:
“I rang More2Life to enquire about paying interest on my recent Equity Release Loan (Lifetime Mortgage) that I had recently drawn. The lady who answered the call was called Emma and she was incredibly helpful and went the extra mile to fully explain what I needed to do and the options available.”
When searching the equity release reviews here, we did notice that nearly all of the positive reviews referenced staff names. This is slightly odd behaviour and may be a sign of fake reviews. Or it could be a request from the company to give credit to the staff. Either way, be somewhat cautious when reading these or other company reviews.
- One Family
One Family is closing in on 900 Trustpilot reviews at the time of publication with a respectable score of 4.0 overall. Some of the company’s reviews centre around excellent customer service, such as:
“My impression was that the Adviser understood my fears about engaging in the process around lifetime mortgages. She was friendly from the start and easy to speak with.”
“When we decided to release equity from our house we found OneFamily online and we could not be happier with the experience. Andrea Coppard-Geal was our Advisor and she kept us fully informed of progress every step of the way.”
Is equity release a con?
Equity release is not a con. It is a legitimate method of borrowing money for older homeowners, and this money can be exceptionally useful to improve the quality of life in retirement. It may even be used to pay for private medical services and home improvements to make life easier. Some people consider it a con due to the amount needed to pay back at the end.
Discover more free equity release chat!
For more free information on equity release products and to learn more about the companies listed above, you can find accurate information at MoneyNerd. Search your equity release query on our site today to find relevant guides that are simple to follow.