Four Little-Known Truths About Equity Release

If you’ve searched online for equity release info, you’ve likely seen articles promising to reveal “the truth” or “bust the myths.” But let’s be honest — a lot of those so-called myths are now fairly well known. Yes, with a lifetime mortgage, you still own your home. That’s not a secret anymore.

So we decided to take things further. We’ve spent time digging deeper into equity release — and what we’ve found might genuinely surprise you. This isn’t just the usual list of FAQs. These are four real truths that aren’t always talked about, but could be genuinely useful if you’re over 55 and considering unlocking some of the value in your home.

Alongside these truths, we’ll also clear up some lingering myths and give you a quick overview of the pros and cons — so you’re informed from every angle.

A lot of people assume equity release only applies to the house they live in — but that’s not the full story.

If you own another property — maybe a holiday home or a rental — there’s a good chance you could release tax-free cash from that too. This could be a smart alternative to selling it outright or refinancing. If the property qualifies, the money is yours to use as you like, whether that’s for home improvements, helping out family, or something more personal.

As with all equity release plans, if there’s an existing mortgage on the property, that would need to be cleared — often using the funds you unlock. But specialist products exist for second homes and buy-to-let properties, and they can give you more options than you might have thought.

Equity release isn’t just about accessing money tied up in your home — it could also be the key to buying a new one.

Whether it’s a peaceful seaside escape or a fresh start somewhere closer to family, you can use equity release to help make that move. You might take out a lump sum from your current property to fund a purchase or deposit. Or you might release equity from the property you’re buying, depending on the lender and the plan.

It’s a flexible option that’s become much more common in recent years. The right equity release adviser can talk you through how it might work for your situation — and help you access products that suit your goals.

Let’s face it — financial history isn’t always perfect. But if you’ve had credit problems in the past, don’t assume that equity release is off the table.

Because equity release plans don’t rely on regular repayments or proof of income, your credit score isn’t usually a major factor. In fact, many people use equity release as a way to get on top of existing debts, including loans and credit card balances.

That said, your provider may still have some conditions. They might ask you to clear secured loan arrears, pay off CCJs, or settle other debts using part of the money you release — either before or as part of the process. If you’ve been bankrupt in the past, you’ll usually need to be officially discharged first.

Still, the key takeaway is this: your credit history may be part of the discussion, but it’s rarely a dealbreaker.

Here’s a positive twist not everyone knows about: if you have a health condition or certain lifestyle factors, you might qualify for an “enhanced” equity release plan.

These plans can offer either a lower interest rate, a larger lump sum, or both. That’s because providers take into account how long a plan is likely to run. Conditions like high blood pressure, diabetes, or a history of serious illness can all make you eligible for enhanced terms. Even being a current or former smoker could qualify.

It’s worth noting that not all lenders offer enhanced plans, and some advisers don’t always ask the right questions — so make sure you work with someone who will check your eligibility thoroughly. It could make a significant difference to the deal you get.

There’s a lot of information out there — and unfortunately, that includes quite a few persistent myths. Let’s set the record straight.

Truth: That can’t happen with a plan that meets the Equity Release Council’s standards.

The no negative equity guarantee means your debt will never exceed the value of your home when it’s sold. No matter what happens to property prices or how long the plan runs, your estate won’t be left with extra to pay.

Truth: Many modern plans let you protect a percentage of your home’s value so you can leave an inheritance.

Whether it’s a lifetime mortgage with a guaranteed portion set aside or a home reversion plan where you retain part ownership, there are options if leaving something behind is important to you.

Truth: Moving home is absolutely possible.

As long as the new property meets your provider’s criteria, you can take your equity release plan with you. This portability is built into plans that meet Equity Release Council standards.

Truth: If you’ve been discharged from bankruptcy — usually after 12 months — you can still apply for equity release.

Your lender may have extra conditions, but being discharged means the restrictions are lifted. And as mentioned earlier, bad credit generally doesn’t block you.

Equity release has its benefits, but it’s not right for everyone. Here’s a quick overview to help you weigh things up.

• Access to tax-free cash without having to sell or downsize your home.
• Stay in your home for life or until you move into long-term care.
• No monthly repayments required — unless you choose to make them voluntarily.
• Flexible access to funds, either as a lump sum or drawn down as needed.
• Useful for interest-only mortgage holders with no repayment plan.

• Reduces the value of your estate, which can affect inheritance.
• Compound interest adds up quickly if you don’t make payments.
• May affect means-tested benefits, depending on your financial situation.
• Could impact care funding from your local authority if you receive help.
• Early repayment charges may apply if you want to repay the loan early (though some plans are more flexible than others).

Equity release isn’t just a last resort — it’s become a flexible and regulated option for over-55s looking to make more of their retirement. If you want to stay in your home, boost your finances, or explore new possibilities, it’s worth taking a closer look.

And now you know a few things that many people don’t.