People still unaware of important equity release safeguards

Just 27% of those without a plan know about ‘no negative equity guarantee’

Written in line with our editorial policy.

Research from SunLife highlights a worrying lack of understanding about key protections designed to safeguard equity release customers and their families.

A significant knowledge gap remains

The new report shows how homeowners’ understanding of the details surrounding equity release remains limited. Just 6% of those who haven’t used equity release say they know all the facts – an improvement from 4% in 2023 but still a small proportion.

The study also highlights that knowledge of specific equity release features has declined. For example:

• Only 53% of over-50s are aware that expert financial advice is required before taking out equity release, down from 57% in 2023.
• Awareness that equity release is regulated by the Financial Conduct Authority (FCA) has slightly decreased from 59% to 58%.
• Only 27% are aware that the ‘no negative equity guarantee’ exists.
• Just 26% are aware that you can move your plan to a suitable new property.

Misconceptions and lack of awareness about safeguards

One of the most concerning findings is that just 27% know that many plans include a no-negative-equity guarantee. This safeguard ensures that borrowers will never owe more than the value of their home, meaning their estate cannot be left in debt due to equity release.

Lack of awareness of this key protection may be discouraging some homeowners from considering equity release. The report found that a common reason people reject the idea is the fear of leaving loved ones with debt. Similarly, some respondents believed that equity release would involve too much risk, or they would be saddled with interest repayments.

The research also found that awareness of inheritance protection – a feature allowing homeowners to ring-fence a portion of their property’s value for beneficiaries – was just 26% in 2024, up slightly from 24% in 2023.

You can read more about these and other common misconceptions here in our blog: “Four lesser known truths about equity release.”

The role of the Equity Release Council

If more people were aware of the vital role the Equity Release Council plays in protecting equity release customers, this essential financial tool might be helping many more homeowners each year. The industry body sets very high standards for lenders, ensuring all Council-approved plans include important safeguards:

• The no-negative-equity guarantee – ensuring borrowers never owe more than their property’s value.
• The right to remain in your home for life – customers can stay in their home for life or until the last remaining homeowner moves into long-term care.
• The right to move to another suitable property – most plans allow homeowners to move house, subject to lender approval.
• You have the right to make penalty-free ad hoc payments – subject to lending criteria.
• Fixed interest rates – for lifetime mortgages, the interest rate must be fixed for each release or, if variable, the rate must be capped for the life of the loan.

These protections are designed to make equity release a safer and more transparent financial option for those considering it. Learn more about these five important equity release safeguards.

The SunLife report highlights that despite equity release remaining a popular financial tool, misconceptions and knowledge gaps persist. Taking the time to understand key safeguards – like the no-negative-equity guarantee – could help you to make confident, informed choices about unlocking your property wealth in later life.

The importance of expert advice

Equity release can be a helpful solution for some homeowners, but it is not suitable for everyone. As with any major financial decision, seeking expert advice is essential. A specialist adviser can explain how equity release works, check your eligibility and highlight potential impacts on inheritance and means-tested benefits.

Remember, when our friendly team here at Equity Release Wise arranges appointments for you, we only do so with a selected FCA-authorised equity release adviser. To talk to one of our selected advisers, please call 0808 178 3055 or request a call back.

Source

Just 27% of those without a plan know about ‘no negative equity guarantee’: Equity release awareness and misconceptions. SunLife. Accessed 18 February 2025.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn