Equity Release Companies to Avoid

If you’ve been exploring equity release options on how to unlock some of the value locked away in your home, then you need to know which equity release firms you can trust and which ones you should avoid.

But with so many equity release providers available today, how do you spot a risky lender from a safe lender and protect yourself from hidden fees or unfair deals?

As an established mortgage lender with over 20 years of helping borrowers navigate the world of mortgages, Boon Brokers can help you secure the equity release mortgage that matches your needs.

In this article, we take a look at all the equity release companies to avoid, explain in clear detail how equity release works, and guide you through how to choose regulated equity release lenders that you can trust. Let’s get started.

What Different Types of Equity Release Are There?

Firstly, before settling on any one equity release product, it is important to consider all your equity release options and products that are available to you.

Equity Release will generally fall into two categories: lifetime mortgages and home reversion plans. Each of these types of equity release will have their own distinct features, costs, and benefits, and so it is important that you understand how they work and which better suits your requirements.

At Boon Brokers, our dedicated equity release advisers can help you explore and compare products from a wide-range of equity release lenders, ensuring that you find a solution that aligns with your needs.

What Is a Lifetime Mortgage and How Does It Work?

The most common equity release plan is known as a lifetime mortgage. With a lifetime mortgage, the equity that you release (money that you borrow) will be secured against your home. Interest will build up over time and will usually be repaid when you pass away or move into long-term care.

One of the key factors of a lifetime mortgage is that during your lifetime mortgage term, you will still be able to live in your home. The loan and interest are typically only repaid when you either sell, move into long-term care, or pass away.

As a rule of thumb, equity release is available to those who are 55 years or older. However, there are a variety of different lifetime mortgage products on the market today, including some available to people who are under 55.

What Is a Reversion Plan and How Does It Work?

In very rare occasions today, some borrowers may opt for a home reversion plan.

Home reversion plans work differently than lifetime mortgages as instead of borrowing the money against your property,  you actually sell all or part of your home to an equity release provider in exchange for a lump sum or regular payments.

In the same fashion as a lifetime mortgage, however,  you will still retain the right to live rent-free for the rest of your life or until you move into permanent care.

While this option can be suitable for those who are worried about taking on interest, the biggest drawback of a home reversion plan is that it means selling equity in your home at a discounted rate. As such, home reversion plans tend to be much less popular, but remain an important alternative for some homeowners to consider.

Would I Be Eligible for an Equity Release?

Understanding the types of equity release is a great first step, but perhaps an equally important first step question should be: “Am I eligible for equity release?”

In order to meet most equity release eligibility standards, you must be at least 55 years old and own a home that meets lender criteria for location and value.

It is also important to note that the property’s overall condition and your current health will also affect your eligibility and the terms offered. Additionally, some equity release providers require you to live in the home as your main residence.

If you’re unsure about your eligibility or whether equity release is right for you, speaking with a trusted adviser will help provide clarity. At Boon Brokers, our dedicated equity release team can help assess your situation thoroughly, identify which equity release lenders and plans you qualify for, and which match your financial goals, ensuring you are only faced with the most suitable equity release plans.

How Can I Use Equity Release?

Many of our clients ask us: “What can you do with the funds that are released from your home through equity release?” and “Are there limitations or strict guidelines on how you can spend your money?” 

Generally, there are no limitations on what you can spend your money, raised from your equity release, on. In fact, many use equity release to boost retirement income, settle debts, or fund home renovations.

Today, a very common reason for equity release plans is to assist with family members. With the rise in property prices, many parents and grandparents are helping their family with house deposits and support through equity release and purchase house for child schemes.

With that said, while the flexibility of your finance and spending is in your hands, it’s important to keep in mind how releasing equity will affect your personal finances and any future inheritance you wish to leave.

In truth, expert advice is key. That’s why our team at Boon Brokers takes the time to guide clients in making informed choices about not only how to use their released equity responsibly, but how each plan will affect their financial future and long-term goals.

Which Equity Release Companies Should I Avoid?

Knowing which equity release companies to avoid can help you save both time and money, steering you clear of unsuitable products at often inflated rates.

The short and fast rule is to always check if an equity release lender is authorised by the Financial Conduct Authority (FCA) and a member of the Equity Release Council.

Because there are fewer equity release lenders than standard mortgage lenders, it should be easier to avoid unregulated firms who are not members of the Equity Release Council.

It’s vital that you remain cautious of any companies or lenders that attempt to pressure you into quick decisions, lack transparency about the cost of equity release, and don’t clearly disclose early repayment penalties.

It is always best practice to research any client reviews. Those with low ratings or numerous complaints are likely not to provide the best services and products. Equally, it is important to be wary of any offering that sounds too good to be true.

Always start by researching trusted equity release firms on the official Equity Release Council site. And if you’re unsure on how to navigate the website or which equity release firm to choose, working with a trusted mortgage broker – like Boon Brokers – can help you avoid risky providers.

What Is the Equity Release Council?

While we have noted the importance of The Equity Release Council, you may still be asking “Who are the Equity Release Council and why they matter?

The Equity Release Council is the main regulator that determines the national standards for fair and transparent equity release products within the UK..

Firms and lenders who register to become members will have to follow strict equity release council rules, including full disclosure and consumer protections. These will include safeguarding policies such as the No Negative Equity Guarantee.

In short: Working with Council-approved companies will place you in the hands of regulated companies that you can trust, adding a much needed layer of security to your financial decisions.

Knowing the importance of regulated and expert financial advice, Boon Brokers are proud members of the Equity Release Council and can help you access equity release lenders that meet the highest standards of ethics, transparency, and consumer protection.

Is It a Good Idea to Use Equity Release If I Want to Repay Early?

Are you thinking about early repayment on your equity release plan? Early repayment charges (ERCs) are a key consideration for many – especially if you’re an experienced borrower who has paid off a standard mortgage early.

Just like standard mortgages, many equity release plans will include penalties for repaying early. As such, some providers will include equity release with repayment options, allowing for set overpayments – or in some rare cases a full repayment – without fees.

Crucially, while there many be repayment options available, it may not always be in your best interest

In the case that you’re looking to downsize after you’ve secured an equity release plan, then safeguards like Downsizing Protection can often help you move to a smaller home, pay off your mortgage, and avoid any repayment charges.

Additionally, if you’re on an equity release plan with more than 1 borrower, the Significant Life Event Exemption may apply. This form of protection allows borrowers to repay their loan without incurring ERCs following the death of the first borrower. Furthermore, this can also apply if the first borrower is moved into long-term care.

Today, all equity release products that are provided by regulated lenders will come with No Negative Equity Safeguards. This means that you can never owe more than your property’s value.

At Boon Brokers, we explain each of these details clearly so that you can plan your equity release repayments without surprises.

How to Find a Good Lender

As we’ve now outlined: Choosing the right equity release lenders that are officially regulated can make all the difference to your experience and satisfaction.

Here we have created a quick checklist for you to follow on how to find a reliable and trustworthy lender:

• Check FCA Authorisation

Make sure that you confirm your chosen lender is regulated by the Financial Conduct Authority (FCA) in order to ensure they follow strict consumer protection rules.

• Check the Equity Release Council Membership

Members who are part of the Equity Release Council have to follow strict industry standards, offering protective schemes that safeguard your welfare.

• Research Customer Reviews and Complaints

Take the time to search through platforms like Trustpilot and Yelp for a detailed insight into other customer experiences. This can often reveal common issues, pitfalls, and how they managed (or were unable) to resolve these issues.

• Understand Fees and Charges

Trustworth lenders and advisers will always be transparent, providing clear information on arrangement fees, interest rates, and early repayment charges. Make sure that you ask questions about cost and note their responses.

• Avoid High-Pressure Sales Tactics

Don’t fall into sales traps. Good lenders will always give you time to consider your options and offer independent advice. Specifically with an Equity Release plan, it is vital that you consider all of your options and consult with a professional adviser about how equity release can affect your financial future.

• Consider the range of products

The best lenders offer flexible plans including options for early repayment or downsizing protection.

• Seek Expert Advice

Having an impartial expert in your corner can make the world of difference. Work with a trusted, whole-of-market, mortgage and equity release adviser like Boon Brokers to have access to a dedicated adviser and a broad panel of vetted lenders. This is a sure way to identify the best mortgage option that is tailored to your needs, while avoiding companies with poor reputations.

What Alternatives Are There to Equity Release?

Before committing to equity release, it’s important to consider other alternatives to equity release that may better suit your specific circumstances.

The most common equity release alternatives can be broken down into 3 options, including:

Downsizing

As the name would suggest, downsizing refers to the act of selling your current home and buying a smaller property in order to free up cash, without the need to borrow.

While this method is an ideal solution to reduce upkeep costs and avoid releasing capital, it can come with its own impracticalities. This could include, moving expenses, location, finding a suitable alternative home, and emotional challenges with having to sell your home. .

Remortgaging

If you still have a sufficient income and a good credit history, remortgaging your home for additional funds may be a better option, providing a lower-cost alternative with better interest rates.

Instead of taking out an equity release loan, you can remortgage your house and pay back the agreed monthly amount for the set mortgage term time. This can help you maintain 100% equity in your home which may be especially important if you’re concerned about leaving an inheritance behind.

The downside of this option is that while equity release provides you with a unique flexibility in regards to repayment, a remortgage will mean that you will have to manage and sustain your agreed monthly repayments.

Using Savings or Investments

For those who have valuable assets other than the home property, it might be worth selling these instead.

Depending on the amount of money you wish to borrow and the purpose behind your financial plan,  tapping into existing savings or liquidating investments can be a safer alternative that won’t affect home ownership or future inheritance.

Having these alternatives in eye sight and understanding the pros and cons of each is an important step to making your final decision. At Boon Brokers, we provide impartial comparisons of all options to help you identify the pros and cons relating eligibility, long-term financial impact, and matching you with the mortgage solution for your needs.

Is Equity Release Right for You?

Deciding whether equity release is right for you will ultimately be a personal choice that depends on your unique financial situation, lifestyle, and future plans.

While releasing equity from your home can unlock access to funds that can provide a source of income or lump sum, it’s important to weigh up the potential impact on both your estate and inheritance.

At Boon Brokers, we help you explore all these factors with clear, jargon-free advice, ensuring you fully understand the financial commitment and whether an equity release plan fits your goals.

Choosing the right equity release company can protect your home and financial future. Avoid unregulated equity release firms, understand the cost of equity release, and seek guidance from an FCA-regulated adviser.

Contact Boon Brokers for fee-free expert advice across the whole market to help you find safe, suitable equity release solutions.