Equity Release Companies to Avoid

Home Equity Release Companies to Avoid
Sunny Avenue
Mortgages Sunny Avenue
22 Jul 2023

Equity release has become a popular option for retirees seeking to access the value of their homes. While it offers benefits, such as supplemental income during retirement, it also comes with potential risks, such as scams and unreliable companies. To safeguard your retirement finances, it is essential to know which equity release companies to avoid. 

In this insight, we will explore the key factors to consider and provide you with the necessary information to make an informed decision.

Key Takeaways

  • Regulation Matters: Avoid equity release companies that are not regulated by the Financial Conduct Authority (FCA). Regulation provides an extra layer of security and ensures fair practices in the financial industry.
  • Look for Membership in the Equity Release Council: Companies that are members of the Equity Release Council commit to consumer protection and ethical practices, making them more reliable choices.
  • Beware of High-Pressure Sales Tactics: Reputable companies will give you ample time to make an informed decision. Avoid those that use aggressive sales tactics to rush you into a hasty choice.
  • Demand Transparency: Choose an equity release company that is transparent about all costs and fees associated with their products. Avoid those that are evasive or unclear in their responses.

What Is Equity Release?

Equity release is a financial product that allows homeowners, typically retirees, to access the equity tied up in their properties while still living in them. It is a popular option for those looking to supplement their retirement income or release a lump sum of cash for various purposes, such as paying off debts or funding home improvements. There are two main types of equity release: lifetime mortgages and home reversion plans. A lifetime mortgage allows homeowners to borrow against the value of their home, and the loan, plus interest, is repaid when the homeowner passes away or moves into long-term care. Home reversion plans, on the other hand, involve selling a portion or all of the property to a provider in exchange for a lump sum or regular income, and the homeowner retains the right to live in the property until they pass away or move into care.

Equity Release Companies to Avoid

Most equity release companies are trustworthy, but there are some that are not reliable or might try to deceive you. They could pressure you into signing agreements without explaining everything properly, especially if you're older and might not fully understand the details.

Be careful of fake companies that pretend to be legitimate equity release providers. They might promise you a lot of money or low-interest rates, but they'll hide extra fees and charges that can hurt you financially.

To protect yourself, do thorough research, get advice from someone who is not associated with the company, and only work with well-known and regulated companies. Also, check online reviews from other customers to see if the company has a good reputation. This way, you can make a safer and more informed decision.

Why Are There Equity Release Companies to Avoid?

Here are some key reasons why you should steer clear of certain equity release providers:

Lack of Regulation

Avoid companies that are not regulated by the Financial Conduct Authority (FCA). The FCA plays a crucial role in protecting consumers and ensuring fair practices in the financial industry. Regulated companies are subject to strict rules and regulations, providing you with an added layer of security.

You can find out if the FCA regulates a firm by checking their register here.

Non-Membership in the Equity Release Council

The Equity Release Council is an industry body that sets standards and principles for equity release companies. Membership in the council indicates a commitment to consumer protection and ethical practices. Avoid companies that are not members of the Equity Release Council.

Equity Release Council membership can be checked against its register here.

High-Pressure Sales Tactics

Be wary of companies that employ aggressive or manipulative sales tactics. Reputable companies will give you ample time to consider your options and make an informed decision. Avoid any company that tries to rush you into a decision.

Lack of Transparency

A reliable equity release company should be transparent about all costs and fees associated with their products. If a company is not upfront about these details or avoids providing clear answers to your questions, it is best to avoid them.

Negative Reputation or Track Record

Research the reputation and track record of a company before entering into any agreement. Look for customer reviews and ratings to get an idea of other people's experiences. If a company has a high number of unresolved complaints or negative feedback, it may be a red flag.

By considering these factors and conducting thorough research, you can identify equity release companies to avoid and safeguard your retirement finances.

Identifying Red Flags in Equity Release Companies

To help you identify potential red flags, here are some key indicators that you should watch out for when evaluating equity release companies:

Regulatory Compliance

Make sure the equity release company is regulated by the FCA (Financial Conduct Authority). This means they follow strict rules and protect consumers. You can check the FCA register to see if they are regulated.

Membership in Equity Release Council

Look for companies that are members of the Equity Release Council. This shows they care about ethical practices and protecting consumers. While not a regulator, the council sets standards that its members must follow.

Equity Release Council provider members:

  • More2Life
  • Standard Life
  • Pure Retirement
  • Canada Life
  • Just Retirement
  • Retirement Bridge Group
  • One Family
  • Liverpool Victoria (LV=)
  • Scottish Widows
  • Responsible Lending
  • Legal & General
  • Aviva
  • Hodge
Check Their Reputation

Before you work with a company, see what their customers say about them. Look for reviews and ratings to see if people are happy with their service. If you find lots of negative reviews or unresolved complaints, be careful.

Look for a Downsizing Clause

A downsizing clause is essential. It means you won't get charged extra if you decide to move to a smaller home and repay your mortgage. Make sure the company offers this option.

Voluntary Interest Payments

Find a company that lets you pay back some of the interest whenever you can. This way, you can manage the total cost of the loan better. The Equity Release Council says member lenders should offer this feature to new customers.

No Negative Equity Guarantee

This is crucial in equity release. It means you won't owe more than your home's value. Stay away from companies that don't offer this guarantee.

Transparent Fees

Choose a company that tells you upfront about all the costs and fees associated with their products. They should explain everything clearly and answer any questions you have.

Early Repayment Charges

Check the charges for repaying the loan early. Some companies might have big fees for this. Compare quotes from different companies to find ones with reasonable early repayment charges.

Avoid High-Pressure Sales Tactics

Watch out for companies that push you to sign quickly. Reputable companies will give you time to think and make a wise choice. If you feel pressured, you can reach out to the Financial Ombudsman Service for help.

Thorough Assessment

A good company will carefully check your financial situation before suggesting a product. They should look at other options besides equity release and only approve your application if it's the best fit for your needs.

Right to Move to Another Property

See if the company allows you to take your equity release with you if you move to a different home. This gives you flexibility for the future. If they don't offer this option, be cautious.

Finding an Equity Release Adviser

When picking a financial adviser, here are some easy tips to keep in mind:

Check their Certifications

Look for advisers who have special certifications or qualifications, like being part of the Equity Release Council and having a Certificate for equity release. These show they know their stuff and follow high standards.

Consider Experience

Think about how much experience the adviser has with equity release. The more they've helped people with it before, the better they can guide you.

Know their Fees

Make sure the advisor is clear about how they get paid for their work, whether it's through fees or commissions.

Read Client Reviews

Check what other clients have said about the advisor. Their track record and how happy their clients are can give you a good idea of what to expect.

Choose an Independent Adviser

It's better to go with an adviser who can offer you a wide range of equity release options from different providers. That way, you'll know they're suggesting the best option for you, not just one company's product.

Connect Personally

Find someone you feel comfortable talking to about your finances. Having a good relationship with your advisor is essential since you'll be discussing personal matters with them. Make sure they listen to your concerns and understand your needs.

Final Thoughts: Find an equity release council approved adviser

Choosing the right equity release company is crucial for your retirement funds. Avoid bad companies and do thorough research. Look for trustworthy ones that follow the rules and have a good reputation. Only engage with members of the equity release council.

Don't forget to seek advice from a financial expert to see if equity release is suitable for you.


Stuart is an expert in Property, Money, Banking & Finance, having worked in retail and investment banking for 10+ years before founding Sunny Avenue. Stuart has spent his career studying finance. He holds qualifications in financial studies, mortgage advice & practice, banking operations, dealing & financial markets, derivatives, securities & investments.

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