Life insurance

Exploring the equity release myths

Two people holding hands

Given the rise in the cost of living, you may be looking for a way to make life more comfortable - one option could be to explore a lifetime mortgage.

A lifetime mortgage is a type of equity release, a loan secured against your home which allows you to release tax-free cash without needing to leave your home. We understand there are many common myths surrounding equity release and you likely have a few questions you’d like answered before deciding if it’s right for you.

Read on to help dispel the myths from the facts…

Moving homes

All equity release lenders will allow you to move your loan from one property to another. It is one of the Equity Release Council standards which our partner, Legal & General, are a member of and uphold the standards and regulations of.

However, it should be noted that there are certain instances when it may not be possible to transfer your loan from one home to the next. Your adviser will explain this to you.

Handing over deeds

“I will have to hand over my deeds and will not own my own home anymore” – false.

You will still own your home. Your property remains in your name and the loan is secured against it. You can stay in your home until you die or move into long-term care as long as you meet the terms and conditions. The loan also does not need to be repaid until you die or move into long-term care. Your adviser will explain this to you. Failure to meet the Terms & Conditions as these could result in the forced sale of your property and the loss of your Inheritance Protection if this has been chosen.

Leaving debt

“I will leave a debt for my loved ones if I go ahead with equity release” – false.

This is not the case. You or your beneficiaries will never have to pay back more than the amount your property is sold for. As long as it’s sold for the best price obtainable, and you have met the terms and conditions.

Leaving inheritance

“I cannot leave an inheritance for my family” – false.

Though a lifetime mortgage will reduce an inheritance, you can still leave something behind for those you love. Legal & General offer Inheritance Protection on lifetime mortgages, which reduces the amount you can borrow but gives you flexibility on what you will be able to leave to your loved ones.

As well as the protected percentage, any of the unprotected amount that remains after the loan has been repaid will also be available as inheritance.

A last resort

“Releasing money from your home is a last resort” – false.

Equity release allows you to tap into the wealth you've accumulated in your property and saves you the hassle of having to move. Depending on the type of lifetime mortgage you choose, there may be no affordability assessment and the loan does not have to be repaid until you die or move into long term care.

If you’d like to know more, our partner Legal & General can answer your questions. They can talk you through the options and will even tell you if a lifetime mortgage is not right for you and there are cheaper ways to borrow.

Co-op Insurance Services introduces you to Legal & General, our trusted Later Life Mortgages partner. Legal & General Home Finance Limited (registered number 04896447) and Legal & General Financial Advice Limited (registered number 11901252) are wholly owned subsidiaries of Legal & General Group plc and are registered in England and Wales. Registered office: One Coleman Street, London EC2R 5AA. Both subsidiaries are authorised and regulated by the Financial Conduct Authority.