The NFWI created this booklet and the Financial Services Authority
paid for this work as part of the National Strategy for Financial Capability.
What is Equity Release?
Frequently Asked Questions
This booklet forms part of a series of five, written by the
speakers at You and Your Money - A Conference on Personal
Finance, held at Denman College in May 2008. The conference
offered the opportunity to discover where to find advice, and
how to keep track of finances, choose financial products, plan
ahead, and stay informed about financial matters.
This booklet was written by Jane Vass.
This booklet was created by Denman College, and the Financial Services Authority paid
for this work as part of the National Strategy for Financial Capability. We aim to give you
general information to help you make financial decisions. The information does not constitute
financial or other professional advice; for advice about your own circumstances, you should
consult a professional adviser.
You take out a mortgage on your home but
pay nothing until the property is sold, usually
on your death. The interest is added to the
loan, which means that the amount you owe
grows faster than a normal loan. At 7 per cent
interest, your loan will roughly double every
10 years, but reputable companies guarantee
that you will never have to pay more than the
value of your home (a ‘no negative equity’
guarantee). You can keep the cost down by
using a ‘drawdown’ mortgage that lets you
draw money from the scheme as you need it.
You sell all or a percentage of your home to a
reversion company, but keep the right to live
there for the rest of your life. When the
house is sold, usually on your death, the
company gets the same percentage of the
property’s value at the time. Because it does
not know when it will get its money back,
you will not get the full value of your
property. The maximum amount depends o