What does Martin Lewis say about equity release?

Martin Lewis: equity release tips and opinions

Martin Lewis, founder of Money Saving Expert, says that equity release is right for some people who need extra cash in later life. He does however have tips for anyone considering equity release – including the need to consider alternatives first.

He is perhaps the UK’s most popular personal finance broadcaster, so it’s interesting to see what Martin Lewis says about equity release. That’s why we’ve taken a close look at three of his TV appearances to see what he has to say about this form of lending for people aged 55+.

Here’s what we’ll cover in our guide to what Martin Lewis says about equity release:

• What is equity release? 
• Who is Martin Lewis?
• Equity release: Martin Lewis’ TV appearances. 
• What do we think about Martin’s tips for people considering equity release?
• Where can you get equity release advice? 

We hope this article will help you understand the important points made by Martin Lewis. Equity release is however a potentially complex product, and therefore we would invite you to talk to our selected advisers about your circumstances. They can provide specialist advice on the potential suitability of a lifetime mortgage or home reversion plan.

Just call us on 0808 178 3055 and we’ll arrange a no-obligation appointment with an adviser for you. You can also request a free call back here or get a free quote and an initial indication of how much tax-free cash you could unlock.

What is equity release?

Before looking at what Martin Lewis has said about equity release, we thought it would be good to provide a brief summary of what types of plans are available and how they work.

Equity release is a way for homeowners aged 55+ to unlock tax-free cash from their home. There are two main types of equity release plan:

• A lifetime mortgage is the most popular type, involving a loan that doesn’t have to be paid while you continue to live in your property. Instead of monthly repayments, the loan and interest are paid back through the sale of the home when you pass away or move into long-term care.
• Another option is a home reversion plan that involves selling a portion of your property to a provider. There is no interest to pay, but you will receive less than the market value for your property. You stay in your home as a tenant with no rent to pay until you pass away or move into long-term care.

How much you can release will depend on factors including your age and your property’s value. Our free equity release calculator will give you an indication of how much money you could release.

Who is Martin Lewis?

Martin Lewis is perhaps the UK’s most recognisable financial journalist and broadcaster. He has been appearing on British TV for over 20 years, most recently with regular slots on ITV’s Good Morning Britain, This Morning and his own programme, The Martin Lewis Money Show. These TV appearances are complemented by regular contributions to BBC Radio Five Live.

In 2003, he founded MoneySavingExpert.com, which is now one of the country’s most trusted websites for consumer information about financial services, with money savings tips and an active user forum. He sold the website to MoneySupermarket.com in 2012 but remained editor-in-chief.

Equity release: Martin Lewis’ TV appearances 

Equity release is a popular option for homeowners aged 55 or over, so it’s no surprise that it’s been covered by Martin Lewis. Equity release has been the subject of discussions on several of his TV appearances.

Here are the three main appearances that we could find, with details of what Martin had to say:

This morning, 2017 

Martin was asked by a viewer whether equity release would be a suitable way to pay off £15,000 of credit card debt. Martin said: “It’s not the worst idea I’ve ever heard of. If you’ve got dependents you want to leave your property to, it’s going to eat away at that. But actually, your lifestyle is really important.”

He went on with some general information about equity release, including: “Release as little as possible, and do it as late as possible.” The reasoning behind this is that these are both ways to reduce the amount of interest that builds up on the loan. (See our equity release compound interest calculator for more information on how this works.)

In conclusion, Martin stressed that he couldn’t properly respond to the viewer’s question as he didn’t know all the circumstances. He said: “Get yourself proper advice. You want to be going to a company that’s part of the Equity Release Council, which means that you’ll never owe more than your house is worth when you die.”

This Morning, 2018

Martin was once again in the studio with Holly Willoughby and Phillip Schofield to explain how equity release works. He also mentioned that downsizing is an alternative to equity release that people should also consider.

He had this to say about who may find equity release suitable: “Lots of older people are cash poor, they don’t have enough money in the bank to live off, but they have a very valuable house.”

One of the important issues anyone considering this form of later life lending should consider is the effect of equity release on inheritance. This is what Martin had to say about that: “If you’ve got nobody you want to leave the money [from your home] to, this is actually a rather easy way to do it. If you have people you want to leave the money to, you are generally taking money away from their inheritance… But this is your money for you to live on and they’ve got a chance to make their own cash.” 

This Morning, 2021

Martin answered a question from a viewer with a house worth £400,000 about ways to free up some equity without selling the house. He first suggested she reconsider downsizing before going on to explain how each of the two types of equity release work.

When explaining lifetime mortgages, Martin specifically mentioned drawdown lifetime mortgages. He was referring here to the way that drawdown plans can reduce the amount of interest that will accrue on a lifetime mortgage. (See more on this below.)

Martin finished by again recommending that consumers get advice from a member of the Equity Release Council, before mentioning that equity release may affect your entitlement to benefits, so this is also something to consider.

What do we think about Martin’s suggestions for people considering equity release?

Martin Lewis has provided information on a number of issues for anyone thinking of taking out an equity release plan. Here’s a summary of what he said on the three TV appearances we’ve covered above, along with our thoughts on the points he covered:

H3: Look at alternatives first 

Martin often mentions downsizing as an alternative to equity release, which is where you sell your home and move to a smaller one, or one in a less expensive area. 

Other alternatives to equity release to consider may include getting help from family members, taking in a lodger or remortgaging. See our article on alternatives to equity release for more information.

We completely agree that everyone taking out equity release should consider alternative ways to raise money first. Equity release can be an excellent way to raise the money you need, but unless you pay off the interest each month with an interest-only lifetime mortgage, it is an expensive way to borrow. 

Our selected advisers will always discuss alternatives with you. If they think there is a better alternative to equity release, they will always tell you. 

Release as little as possible 

Martin urges people to access only what they need through equity release. We certainly agree that you should think carefully about how much money you need and why you need it before entering into an equity release plan. 

The cost of a lifetime mortgage and the compound interest that accrues may not be a major concern if you aren’t worried about how big an inheritance you leave. But if leaving an inheritance is important to you, remember that the less you release, the smaller the build-up of interest. 

Do it as late as possible

Martin’s comments here once again relate to the way that interest builds up on a lifetime mortgage. The older you are when you take out a plan, the less time it will run before you pass away or move into long-term care. Therefore, less interest will typically build up than if you were to take the money sooner.

This is of course true, and releasing equity as late as possible will reduce the cost. We would however point out that some people who are ‘cash poor, asset rich’ might need the money now and therefore may not feel able to wait to release equity. 

A retirement income report from the Pensions Policy Institute illustrates the fact that many people in later life are short of money when it says that: “Millions of people in their 50s and 60s are running out of time to prepare financially for retirement.”

If you need the money now, and have exhausted other alternatives, you may decide that taking out an equity release plan may be the only realistic way to access cash you need without having to sell up and move.

Consider a drawdown lifetime mortgage

Martin has mentioned that a drawdown lifetime mortgage is a way to reduce the cost of equity release. However, there’s more to what he said in his 2021 This Morning appearance.

He said that with a drawdown lifetime mortgage: “You don’t have to take as much and you can pay some of it off.”

Let’s break that sentence down into its two parts:

“You don’t have to take as much.” Martin was correct when he indicated that a drawdown lifetime mortgage can be a way to reduce the cost of equity release. That’s because you take your tax-free cash in stages and only start paying interest on each instalment as and when you withdraw it.

“You can pay some of it off.” This is accurate, but it’s not just drawdown plans that allow you to pay off some of your loan without incurring penalty charges. A lump sum lifetime mortgage will also let you pay off some of your loan penalty-free: this option isn’t exclusive to drawdown plans.

Paying off some of your loan early can reduce the amount of interest that accrues, and therefore the overall cost of equity release. We’ve put together a guide to paying off equity release early to help you understand your options. 

Get advice from a member of the Equity Release Council

The Equity Release Council is the UK’s industry body setting standards to protect consumers. Advisers who are Equity Release Council members commit to following the organisation’s code of conduct and standards. This includes giving you ‘fair, simple and complete’ information about the costs of any plan they recommend, potential tax implications, what will happen if you move to another property, and so on.

Where can I get trusted equity release advice? 

Here at Equity Release Wise, our selected advisers are members of the Equity Release Council. That means they have opted into various rules and standards designed to protect consumers like you. They will also recommend plans from providers who are also members, and who therefore offer a number of equity release guarantees including the ‘no negative equity’ guarantee.

If you’d like to explore your options for equity release, call us on 0808 178 3055 and we’ll arrange a no-obligation appointment with an adviser for you. You can also request a free call back here or get a free quote and an initial indication of how much tax-free cash you could unlock.

Frequently asked questions

Q: What are Martin Lewis’ views on equity release? 

Martin has discussed equity release a few times during his appearances on television. On one occasion he stated that using a plan to get yourself out of financial difficulties in some circumstances is “not the worst I’ve ever heard of.” 

He went on to mention the need to “release as little as possible, and do it as late as possible” to minimise the amount of interest that accrues. He also pointed out that if you have people that you want to leave your property to one day then equity release will erode some of that value and reduce their inheritance.

For those who decide to find out more about equity release, he recommends getting proper advice from a company that’s a member of the Equity Release Council. Though there are many benefits to doing this, the main reason he gives is so you’ll never owe more than the value of your home. This is because of the ‘no negative equity’ guarantee that members offer to their customers.

Q: Does Martin Lewis recommend equity release? 

It is important to note that Martin Lewis is not a financial adviser and tends not to provide advice or recommendations in his discussions about later life borrowing. However, he does provide some helpful suggestions of what type of plan might be suitable for homeowners aged 55+ in need of a cash boost. 

For instance, in one television appearance he points out that with a drawdown lifetime mortgage you take the money as and when you need it rather than in one lump sum. The benefit of this is that less interest will accrue on the loan compared to a lump sum plan.

He also points out some of the risks of equity release, such as the way that it will naturally reduce the value of your estate, and the fact that releasing cash could affect your eligibility for benefits such as Universal Credit or Pension Credit.

In summary, Martin Lewis suggests equity release mortgages can be expensive and “there is a lot to think about”, but that it is right for some people.

Q: Does Martin Lewis have an equity release calculator? 

No, he does not offer an equity release calculator on the Money Saving Expert website. But if this is something you are looking for then Equity Release Wise can help. Our free online equity release calculator is based on current equity release interest rates so you can find out the maximum amount you could potentially unlock.

If equity release interest is a concern for you then you might find our interactive equity release compound interest calculator useful, too.

This free online tool allows homeowners to work out how much compound interest will accrue on a lifetime mortgage. Because the calculator is interactive, you can enter multiple combinations to work out how much interest will accrue on a plan in different circumstances.

About Richard Groom. A writer with 20+ years’ experience across several sectors including financial services, Richard has a passion for writing clear and simple content on even the most complex of subjects. In his spare time, Richard loves exploring the hills and mountains of the UK on long walks with his faithful cocker spaniel. Follow Richard on LinkedIn