Only one in three homeowners aged over 55 feels confident they understand what equity release is and how it works, research from Boon Brokers has found.
Despite equity release being aimed solely at homeowners aged over 55, 67% of those surveyed admit they aren’t clear what it actually is.
The survey, which questioned almost 1,000 homeowners in the relevant age bracket, revealed that men are more likely to feel they understand equity release than women, at 39% opposed to 28%.
Those in South West England were most likely to feel clued up on the subject (47%), as opposed to only 25% of those in the North of England.
The research from Boon Brokers also revealed that more than nine out of 10 homeowners aged 55 and over (8%) don’t understand the difference between a lifetime mortgage and home reversion plan, which are the two different types of equity release products available in the UK.
A lifetime mortgage ensures you maintain 100% property ownership until you die or move into residential care, whilst a home reversion plan will sell a proportion or the entirety of your home, although you remain in it.
Gerard Boon, partner of Boon Brokers, said: “Equity release can be ideal for people in some circumstances and part of the process is that you must seek professional advice before taking out equity release, to make sure you fully understand the process.
“However, it’s concerning that so many in the appropriate age group don’t even know what equity release is. I think some of it is that people feel uncomfortable talking about deaths and ‘what ifs’.
“But if a lot of your wealth is tied up in property, equity release can be an ideal solution to free up some money to help with retirement costs or to help out family, whilst allowing you to remain in your own home for as long as you want to.
“The regulations mean your rights are safeguarded and you can also protect an inheritance if that is important to you.
“15% of homeowners are put off by the thought of high fees, but there are brokers such as ourselves who offer our advice and expertise for free.
“Those interested in finding out more should always look for companies which are registered with the FCA and who are members of the Equity Release Council so they can make sure they are protected.”