SHIP dispels top-five equity release myths

New research from Safe Home Income Plans (SHIP) shows a lack of understanding about equity release among consumers.

The first myth, believed by 69% of UK consumers, is that the customer risks losing his or her home. However, SHIP makes it clear that the homeowner can remain in the property for life provided it remains his or her main residence.

The second myth, upheld by 67%, is that the customer will not be able to leave an inheritance. But this is not the case; when the customer dies or moves into long-term care, the home is sold and the money is used to pay off the loan. Any money left over goes to the homeowner’s beneficiaries.

More than half (52%) of respondents believed equity release would prevent them from moving home. However, the equity release plan can be moved to another property without any financial penalty.

Around 47% believe equity release is unsafe and unregulated. However, all SHIP members must abide by a strict complaints procedure to satisfy the Financial Services Authority (FSA).

Finally, 43% believe the homeowner’s children will end up repaying the loan themselves. But SHIP points out that the loan never exceeds the value of the property, so no debt will ever be left on the estate.

Despite these misconceptions, 49% said equity release should be explored as a retirement planning option and 20% said they intend to use equity release products in the future.

Commenting on the findings, director general of SHIP, Andrea Rozario, said: “People can draw confidence from the knowledge that equity release is an activity regulated by the FSA and products offered by members of SHIP over a number of guarantees which mean you can remain in your home until you decide to leave, and you will never owe more than the value of your home.”