Equity Release: Is It Possible to Still be Scammed in 2022?

First of all, equity release is safer than it’s ever been in 2022. But, with a history riddled with controversy, some still fear that equity release could be nothing more than a scam.

The question is, is it possible to still be scammed today, despite the equity release safety measures in place? John Lawson, the equity release expert from SovereignBoss, has insight into the world of equity release in 2022. Here’s his verdict.

What is Equity Release?

Equity release allows homeowners over 55 to unlock the cash tied into their property. No repayments are required in their lifetime. Rather, the loan and compound interest are covered when the last homeowner dies or moves to a care home.

Furthermore, the Equity Release Council announced that as of 31 March 2022, homeowners can make voluntary loan and interest repayments, stopping and starting whenever they wish. These repayments can drastically reduce the value of the loan. 

Equity Release in Years Gone By

Back in the 1980s, equity release was a dodgy financial plan. Lenders would charge homeowners a fortune in interest, and there was no regulation or control. Homeowners would release cash, only resulting in huge amounts of debt, losing their home, or ending up destitute. 

Fortunately, these equity release horror stories are a thing of the past, and the industry has never looked better. 

Is Equity Release Safe in 2022?

Yes, equity release is safe in 2022, as long as you unlock cash from a member of the Equity Release Council. Originally SHIP, the Equity Release Council was formed in response to dubious lenders. Realising that equity release can be a brilliant financial product for retirees, the group got together in 1991, and the rest is history. 

Some brilliant rules by the Equity Release Council include:

• The no negative equity guarantee means that homeowners can never owe more than the final sale value of the property. Any additional debt will be written off.
• Interest rates on equity release must be fixed, or otherwise, if variable, must be capped. 
• Homeowners cannot risk foreclosure and have the right to remain living in their home for life. 
• Homeowners must seek financial advice before unlocking an equity release product. 

Are There Still Dubious Equity Release Lenders Around?

While there may potentially be dubious lenders out there, it’s easy not to be scammed in 2022 if you do your research. Hence, always opt for a lender that’s a member of the Equity Release Council.

One of the keys to recognising a legitimate lender is if they go through the entire equity release process, helping you ensure that it’s the right option for you and your family. Avoid any ‘lenders’ who will instantly provide you with equity release without knowing any of your circumstances. Equity release is a 4 to 12-week process, not an instant or overnight loan. 

In Conclusion

In tough economic times, dodgy people will try to take advantage of society’s most vulnerable. So, with equity release being more popular than ever, it’s isn’t impossible that scam artists will try to mimic these plans to scam retirees out of their money. 

Therefore, if you want to unlock the equity from your home, you must firstly contact a financial adviser that specialises in equity release and opt for a lender that’s an Equity Release Council member. That way, you can unlock equity with complete confidence, as it’s safer and more flexible than it’s ever been before.

Fortunately, SovereignBoss has listed the top equity release companies in 2022, helping you secure a safe and beneficial equity release loan that could change the course of your retirement.