Equity Release Companies To Avoid

We consider what to avoid, including any pitfalls, and address the horror stories to help you safely access the wealth tied up in your home

Table of Contents

Table of Contents

truths about comparing equity release providers image of homeowners comparing the myths and facts

Author Paul Murphy:

Equity release had a bad name in the past, although this has changed with strict regulation and product innovation. 

What companies should you avoid, and why? We explore the important points to check when considering equity release. 

Dealing with a professional broker such as Later Life Finance means you can safely navigate all your options. 

Very good
Michael Dilucia
Michael Dilucia
My equity release application had been rejected 3 times when I was referred to Peter at Later Life. He was extremely thorough, patient, friendly, and knowledgeable. He helped us with every step of the application and explained everything clearly and patiently. We finally succeeded in getting the equity release we wanted. I cannot recommend them highly enough. Their service goes above and beyond. Very happy customers!
Sherry Izadi
Sherry Izadi
Paul has been a rock throughout the most traumatic time of my life. His patience has been endless as I was clueless about my financial complications after the death of my husband. I recommend his services to anyone out there needing his advice and guidance.
Hazel Franklin
Hazel Franklin
Paul Murphy was superb in sourcing and arranging my lifetime mortgage and his professionalism was second to none. I would recommend him without reservation.
Tony Holloway
Tony Holloway
Paul did a first class job helping me secure a great rate for my equity release proposition. I like the idea of equity release but at the right rate Paul was competitive and at the expense of his own commission made it happen. I really felt I was the focus not him. The big firms with the fancy marketing were almost twice as much in terms of all- important compound interest. I highly recommend Paul, he works for you, not 'them'. I also felt safe with the solicitors he recommended, they too sent a first class guy who was a pleasure to work with. Equity release is not cheap, it's vital that people like Paul work for your best interest (pun intended). What price can you place on the latter peace of mind having financial security brings. Highly delighted.
Mike Murray
Mike Murray
We have used Paul's services twice in just over a year. Initially it was to change provider as better interes rates were available. On the annual review it transpired that no early repayment charges would be levied. Being a Yorkshire man l searched for best rates, providers and advisors and it was back to Paul. I have no loyalty where money is concerned but transparency, knowledge and reliability are paramount. That's exactly what we got. Good service, excellent communication, expedience and saved money. Second time around not even a direct fee to pay for the service. Another provider did come up with an option however their fees were somewhat prohibitive, when l brought this to their attention they offered to slash the fee. Not good practice. So after all the waffle. I have no reservations in recommending Paul's services.
Anthony Grey
Anthony Grey
We had reservations about Equity Release plans and approached a number of leading companies. Glad we settled with Paul Murphy and Responsible Life. He was patient and personable and guided us through the process. We received a most professional service, never felt under pressure. The plan is now in place. Excellent communications throughout. No hesitation, would highly recommend Paul. Jw.
Jeffrey Wade
Jeffrey Wade
A truely excellent service from Paul. From the moment we made contact with Paul he provided clear balanced advice supported by any documentation we asked for. We researched the market at the same time, independently, and it was evident Paul was offering a very competitive product that met our needs exactly. Paul’s speed of communication was outstanding, by e mail or phone, and we literally had replies within minutes. An extremely professional and friendly service and we were delighted Paul secured the deal we wanted. We wouldn’t hesitate to recommend Paul’s expertise, advice and resultant product suggestions to anyone considering these financial products. Thank you!!
Priors Bob
Priors Bob
Brilliant service from this company! Paul was so helpful all through the process and made everything so simple to understand! Thank you Paul, you are a star! Would definitely recommend!
Alice Froggatt
Alice Froggatt

Which equity release companies should you avoid?

Following  2 simple rules will help you decide which equity release companies to avoid. 


  1. Only deal with FCA regulated lenders
  2. Only deal with Equity Release Council registered companies

The FCA are the Financial Conduct Authority and regulate the UK Financial Services Market. Equity Release Companies who fall under UK regulation are safe to work with.

Our lifetime mortgage reviews will help you when comparing lifetime mortgage providers to help provide insight into the range of options available.  

Later Life Finance are FCA authorised under reference 959556

Who are equity release council providers?

  • More2Life
  • Standard Life
  • LiveMore
  • Royal London
  • Pure Retirement
  • Canada Life
  • Just Retirement
  • One Family
  • Liverpool Victoria (LV=)
  • Scottish Widows
  • Legal & General
  • Aviva
  • Standard Life
  • Hodge
  • Retirement Bridge Group

You can check the FCA register for equity release companies to avoid here 

You can check Equity release council registered providers here

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What are the horror stories and pitfalls to watch out for?

Thankfully modern equity release companies are reputable firms, but what pitfalls should you look out for?

1. Compound Interest (Can be managed with repayments)

The first little known truth about equity release is that lifetime mortgages, the most popular form of equity release, allow you to make voluntary repayments to avoid or reduce the effect of compound interest on your equity release scheme.

This means you can preserve more of your equity as the plans can be run in similar way to a conventional mortgage, but without the risk of defaulting on payments, as making these payments is completely optional. 

2. Negative equity (You can never owe more than the value of your home)

The second little known truth about equity release is that neither you nor your beneficiaries will be burdened with additional debt when repaying the money borrowed if your home sells for less than you’d anticipated when you took out your equity release scheme.

If the sale of your home doesn’t cover what you owe on your equity release scheme, your equity release provider will write off the difference.

As a result, you and your estate will always be protected against owing more than your home is worth.

3. Reduced Inheritance (You can guarantee an inheritance with equity release schemes).

The third little known truth about equity release is many people think an equity release loan will decrease the value of their estate until there’s nothing left, but this is something that can be avoided.

You’ll still be able to preserve an inheritance to your loved ones if you’ve released equity from your home.

A feature of certain lifetime mortgages is called ‘Inheritance Protection’ which means you’ll be able to guarantee that your children or other beneficiaries receive an inheritance when this feature is built into your plan.

4. Moving Home (You can still move home with equity release schemes)

The fourth little known truth about equity release you can still move home if you’ve taken a lifetime mortgage, the most popular type of equity release.

You can ‘port’ which means move the lifetime mortgage with you to the new property, as long as it is acceptable for lending purposes, which means ‘standard construction’. Basically, the lenders are just looking to ensure the property is acceptable security for lending purposes.

a graphic showing Who are the best equity release companies in 2023?

How to avoid equity release horror stories by getting the right plan for you

Read on to discover the 4 Top Tips of equity release to discuss with your adviser.

1. Drawdown lifetime mortgages can offer the most flexible solution

The first top tip about equity release is that drawdown lifetime mortgages allow you to take the money in smaller amounts which can reduce the effect of compound interest on your equity release scheme.

This means you can preserve more of your equity and be in control when you take any further money from the mortgage. This feature is also known as a reserve facility and is a very popular form of equity release.

2. Downsizing protection is important to consider

The second top tip about equity release is downsizing protection is an option available and should be considered where moving home and settling the lifetime mortgage mortgage early is potentially on the cards.

This level of planning is crucial and will ensure you secure the best solution for your longer term plans.

3. Inheritance Tax planning with equity release schemes

The third top tip about equity release is a lifetime mortgage reduces the size of your estate on death, which can reduce your inheritance tax bill as a result.

This is worth considering when estate planning and considering whether gifting an early inheritance to your family may be beneficial.

4.Later Life Finance provide a long-term service

The fourth top tip about equity release is later life finance provide a long-term service for our customers, not just a one-off transaction, but a lifetime service for peace of mind and security in your home for the years to come.

For expert advice get in touch with us today on 0800 2465228.

an image of the Pros and cons of equity release with a balanced view of each

What Else Do I Need To Consider With Avoiding Equity Release Problems?

The Costs of Equity Release

There are setup costs associated with arranging equity release to consider. These costs, can range from £1,500 to £2,500 and include broker fees, lender fees and solicitor fees. Other fees to consider are early repayment charges for early settlement.

Broker Fees

Broker fees, also known as advice fees are payable to your broker for sourcing and arranging the mortgage. The benefits of using an independent broker such as Later Life Finance is access to the full market and having the mortgage professionally arranged with an expert service to ensure a smooth process and to provide support and advice during the process.

Arrangement Fees

Arrangement fees, also known as mortgage product or completion fees, are charged by certain lenders and frequently part of securing a more competitive interest rate on a fee paid or fee free option for two different interest rates on the same scheme. As they can be added to the mortgage or paid in advance, it’s crucial to remember if you add these to the mortgage interest will also be charged on this amount.

Early Repayment Charges

Early Repayment Charges (ERC) are potential penalties for repaying an equity release loan early. The charges vary from plan to plan, so it’s important to consider your longer-term plans and ensure you’re comfortable the scheme fits in with your plans for moving and downsizing, for example.

The Impact On Inheritance

Equity release can have a profound impact on the inheritance you leave behind.

It can diminish the amount of inheritance that beneficiaries receive as the funds obtained from the sale of the property to settle the equity release loan are subtracted from the inheritance.

However, equity release can also aid in inheritance tax planning by decreasing the IHT liability on your estate.

Inheritance Tax Implications

Equity release can also influence the inheritance tax implications. 

The money obtained from equity release is exempt from taxation and not liable to income tax or Capital Gains Tax. 

A lifetime mortgage is deducted from the value of your estate, which also has the effect of reducing IHT liability. 

The Importance of The Negative Equity Guarantee

Another crucial aspect of equity release plans is the Negative Equity Guarantee. 

This guarantee ensures that the borrower or their estate will never owe more than the property’s value when it is sold.

This feature is especially beneficial in protecting borrowers from financial loss and providing peace of mind when obtaining a loan, secured against your property, in compliance with the financial conduct authority. Additionally, this feature can be helpful for those receiving means tested benefits.

What is Negative Equity Guarantee?

A Negative Equity Guarantee is a clause that must be included in all equity release plans by members of the Equity Release Council. 

This clause ensures that the estate of the individual will never owe more than the property is worth when it is sold.

This guarantee is of paramount importance as it safeguards you and your estate from monetary loss. 

Even if the amount of their existing mortgage debt has exceeded the value of their home due to rolling interest, this guarantee ensures that you will never owe more than the eventual sale proceeds of your home.

Benefits of Negative Equity Guarantee

The Negative Equity Guarantee offers several benefits to borrowers, including:

  • Protection for your estate from financial loss

  • Assurance that you will never owe more than the property’s value when it is sold

  • Safeguard against the possibility of the property’s value depreciating

  • Peace of mind

Moreover, the Negative Equity Guarantee ensures that:

  • The maximum amount repayable to the lender is the sale price of the property minus any sale expenses

  • This guarantee is a standard feature of equity release plans

  • It is mandated by the Equity Release Council for all of its members

Flexibility and Features in Equity Release Plans

Equity release plans offer various types of equity release products, providing flexibility and features to homeowners aged 55 and over. These include:

  • The opportunity to access a lump sum of tax-free money

  • The option to protect a percentage of the property value for one’s loved ones

  • No mandatory monthly repayment

  • The option to make repayments if desired

These features make equity release plans an attractive option for those looking to unlock the value of their home through reliable equity release providers.

Drawdown Facilities

Drawdown facilities are a feature of equity release plans that enable borrowers to access funds as required, up to a previously agreed limit. 

This flexibility allows borrowers to access funds as needed, rather than taking a lump sum all at once.

However, these facilities can be more costly than lump sum equity release plans, as they usually come with higher arrangement fees and interest rates. 

Therefore, understanding these costs is essential to making an informed decision and planning your financial future.

Downsizing Protection

Downsizing protection is another feature in equity release plans that allows borrowers to move to a smaller residence without incurring early repayment charges. This feature can be especially beneficial if you plan to downsize in the future, as it allows you to reduce the balance of your equity release plan without incurring any early repayment charges.

Before signing an equity release agreement, make sure to inform your equity release company or adviser of any plans to downsize in the future. This will allow them to incorporate a downsizing clause into your contract, providing you with added flexibility.


It’s crucial to understand the potential risks and drawbacks, including the horror stories and pitfalls, the costs, and the implications on inheritance when considering which equity release company is right for you, and which to avoid. 

  • Features including voluntary repayments to manage compound interest, drawdown facilities to reduce the effect of interest and ultimately the effect on your estate later down the line, to downsizing protection for moving home, the range of features with modern lifetime mortgages are vast and offer homeowners are real solution for financial flexibility in later life.

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Equity release FAQs

The main downside to equity release is the effect of compound interest on the most common type-the lifetime mortgage. However, this interest effect can be avoided or reduced with voluntary repayments. The equity release council included voluntary repayments as a requirement for lenders to meet their strict codes of conduct. The ability to make voluntary, penalty-free partial repayments was made a compulsory feature for all products to meet Equity Release Council standards from March 2022.
Prior to finalising your decision on equity release, it is crucial to seek financial guidance with a qualified equity release adviser. Discussing your plans with an independent equity release adviser will enable you to compare the whole market, and your adviser will identify the most suitable solution to match your specific circumstances. Additionally, should you opt to proceed with equity release, it is essential to obtain legal advice. Your adviser will be able to suggest an independent solicitor who specialises in equity release.
While Martin Lewis does not provide a direct endorsement for equity release, he acknowledges that under specific circumstances, it can be a viable solution to access funds tied up in your home to meet living costs and provide financial security. Where downsizing has been ruled out, for example, Martin Lewis has a balanced view on the concept of equity release and it's benefits to homeowners seeking extra funds in later life, and advises independent advice on equity release is obtained.
Equity release provides you with a cash lump sum or a drawdown facility to take the cash over a longer timeframe. The "catch" with equity release is that the money released from your home, plus interest will need to be repaid when the property is eventually sold. With a Lifetime Mortgage, you will owe the money borrowed plus the loan interest accrued. If you make voluntary repayments to the mortgage this will help reduce the amount of interest repayable on the mortgage, and will help maximise any inheritance your beneficiaries may receive.
It takes between six and eight weeks for an equity release application to complete and to receive your funds. The timescale depends on whether you have a mortgage to repay from the money taken, and whether there are any legal processes which may delay the process, such as moving home or changing the title.
A lasting power of attorney, or LPA is not required to setup an equity release plan. However, having an LPA in place is important to ensure access to further funds from a drawdown plan if you ever lose capacity to make your own decisions, or cannot sign your wishes for physical reasons, such as a stroke. If you have not set up an LPA and it is required, the Court will need to appoint a deputy for you. Planning ahead is prudent to ensure you have arranged such measures in case an LPA is required in the future, and this can save a great deal of stress if and when the time comes to use the LPA.
Equity release funds are tax-free and can be used for anything you wish (providing any existing mortgage is repaid from the funds). Popular uses of equity release funds include repaying mortgages and unsecured debt, home improvements, a cash boost, purchasing second homes, and helping family with a financial gift.
Lifetime mortgages are the most popular form of equity release and provide the flexibility to move home and make voluntary payments, if preferable. Equity release customers unlocked £1.6 billion in property wealth in Q2 of 2022. (Equity release council)
An equity release application should take around eight weeks until you receive your equity release funds. This depends on whether you have an existing mortgage to repay and if any changes to the title are required, which can increase the timescale to arrange.
In July 2023 the lowest Equity Release rate is currently 6.03% (Monthly Equivalent Rate) fixed for life. The highest interest rate in the market is currently 8.64% (Monthly Equivalent Rate).

Later Life Finance FAQs

Later life lending refers to a mortgage designed for homeowners aged 55 or over which enables you to borrow money based on the value of your home and continue to live there. Later life mortgages include Lifetime Mortgages and Retirement Interest Only mortgages.
Compound interest means the mortgage can grow at a fast rate making it expensive to repay, although voluntary repayments can be made to maintain control of the compound interest effect. This can help preserve more equity for inheritance purposes. Early repayment charges mean exiting the loan early can be expensive. Plans offering downsizing protection are available to avoid penalties if moving home and settling the plan.
In June 2023 you'll usually pay between 5.98% and 9% in interest on a later life mortgage, although this will depend on your mortgage plan. Interest rates on drawdown lifetime mortgages are fixed at the interest rate at the time of further borrowing. This means if interest rates decrease in the future you will benefit from the more competitive interest rate available at the time.
A later life mortgage is a mortgage designed for homeowners aged 55 or over which enables you to borrow money based on the value of your home and continue to live there. Later life mortgages include Lifetime Mortgages and Retirement Interest Only mortgages. Options include later life drawdown plans and voluntary repayment features for more flexibility in later life.
Later life finance refers to mortgages designed for homeowners aged 55 or over which enables you to borrow money based on the value of your home and continue to live there. Later life finance options include Lifetime Mortgages and Retirement Interest Only mortgages. Options include later life drawdown plans and voluntary repayment features for more flexibility in later life.
Later Life Finance are a later life mortgage broker with access to the best mortgages in later life. The mortgages are designed for homeowners aged 55 or over which enables you to borrow money based on the value of your home and continue to live there. Later life mortgages include Lifetime Mortgages and Retirement Interest Only mortgages. Options include later life drawdown plans and voluntary repayment features for more flexibility in later life.