An estimated 67% of homeowners aged over 55 admit they are not confident about what equity release is and how it works, according to Boon Brokers.
One in five (18%) said they have been put off equity release due to horror stories. Web search trends show that people searching ‘is equity release is a good idea?’ has gone up 350% in the past 12 months and ‘how safe is equity release’ has increased by 56% in the past three months.
Yet despite this, 43% of homeowners over 55 said they would consider taking out an equity release product on their property.
Less than one in 10 (8%) understood the difference between a lifetime mortgage and a home reversion plan, the two types of equity release available.
In addition, 12% admitted they have been put off releasing equity held in their home because they are worried their families would not approve.
Men were twice as likely as women to want to use the money to travel and three times more likely to consider using it to pay off other debts.
Gerard Boon, founder and partner at Boon Brokers, said: “There are a lot of misunderstandings around modern equity release products which can put people off fully exploring their options.
“It seems that for many people, they would be releasing the money just to help with day-to-day costs. It’s interesting that so many homeowners suspect their family would disapprove and yet from our experience, and this research, many applicants want to use the money to help their children.
“It’s a shame that equity release brokerages and lenders had a bad reputation in the past. It’s unsurprising that searches for ‘equity release companies to avoid’ are up 750% in the last year.
“Certainly, back when they launched, there were poor products which were mis-sold. However, nowadays there are safety measures in place to make sure, for example, that a homeowner never goes into negative equity.
“You should always choose a company which is registered with the FCA and is a member of the Equity Release Council. As part of the process borrowers must engage a solicitor to make sure they’re fully aware of the details of the product, and it’s worth working with a qualified, whole of market broker who can make sure you get the best possible deal for your circumstances.”