Equity release
What is equity release?
Equity release allows you to access money tied up in the value of your home without having to move out. You can do this either by borrowing the money from a lender, or selling a share of the property to the equity release scheme provider.
When you take a further advance on your mortgage – say, to pay for home improvements – you’re releasing equity. But more commonly, the term equity release is used to refer to the following situations:
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These are generally only available if you’re 55 or over. You borrow a percentage of the value of your home, with interest added over the years. You usually don’t have to make repayments on the loan while you remain in your home. Instead, the loan is paid back after you’ve moved out – for example, to go into a residential home – or after you’ve died.
When this happens, the amount that must be paid back can be much higher than you borrowed, because of all the interest that’s been added. Because of this, the lender will usually limit the amount you can borrow to around 60% of your home’s value.
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With a home reversion plan, you sell a percentage of your home’s value to a scheme provider. It’s generally only available to people over 60. The provider will pay you either a lump sum or regular payments.
You’re entitled to remain in your home for life. Rather than charging interest, the scheme provider will pay you less than the market value for the share in your property. They’ll also keep any increase in the value of the share you’ve sold.
If you want to end an equity release agreement early, you might have to pay an early repayment charge. This can often be a significant amount.
Types of complaints we see
You might have one of a range of complaints about equity release. For example:
- you think equity release wasn’t suitable for you because you’d always planned to move or downsize, or because you have other savings available to you
- you feel you shouldn’t have to pay the early repayment charge because you or your spouse need long-term care, or your spouse has now died
- you – or a relative – may think you were vulnerable and wrongly talked into equity release
- you’re unhappy about the overall cost of your equity release scheme
How to complain
You should first of all explain to your equity release company what you’re unhappy about, and the reasons why.
If you’re not happy with their response, you can bring your complaint to us. We’ll weigh up the evidence and tell you what we think. It’s important that you give us as much information as possible about your complaint.
Find out more about how to complain.
What we look at
When you bring a complaint to us, it's our job to weigh up all the facts. We’ll make a decision about what happened using evidence from you, the financial business and any relevant third parties. We'll also consider what was, at the time of event:
- the relevant law and regulations
- regulator’s rules, guidance and standards
- any industry codes of practice and – where appropriate - good industry practice.
In reviewing your complaint about equity release, we’ll consider things like:
- whether the agreement was clearly explained to you – particularly important features such as early repayment charges?
- did you understand what you were agreeing to, and how the equity release scheme worked?
- did your circumstances at the time you took out the agreement mean you were vulnerable?
- was it necessary to raise money through equity release, or were other ways of raising funds properly explored?
- was equity release suitable for you – for instance, did you plan to move home in the future?
Putting things right
If we decide something’s gone wrong, we’ll consider whether you’ve lost out as a result – and what the business needs to do to put things right. This might include telling a business not to apply an early repayment charge – or to refund the charge if you’ve already paid it.
In some cases we’ll tell the lender to pay compensation for any distress and inconvenience they’ve caused.
Sometimes we’ll decide the lender gave suitable advice and hasn’t done anything unfair. In these cases we won’t ask the lender to do anything.
Case studies
Narinder says her dad was vulnerable when he got a lifetime mortgage
Mortgages
Bob and Sue believed they'd been mis-sold a lifetime mortgage
Mortgages
Read more about the 'Bob and Sue believed they'd been mis-sold a lifetime mortgage' case study
Rhys and Delyth had to pay an early repayment charge in order to move
Mortgages
Resources
You’ll find additional information about equity release on the websites of the Equity Release Council and the Money Advice Service.
Search our decisions database to see our past decisions on complaints involving equity release mortgages.
We also have detailed information for businesses responding to a complaint about equity release.
Detailed information for businesses
If you're a business looking for information to help you resolve complaints, find out more in our detailed information about handling complaints about equity release.