We all have that neighbour who spouts “pub facts” about equity release, listening to them may cause you to be out of pocket for thousands in 2025. The market has shifted, rates have fallen again – giving you an even better reason to consider an equity release option – and rules have become stricter to safeguard you, the consumer.
Yet we still see four common myths circulating, meaning that you could be missing out on cash in your pocket due to these common misunderstandings. We’re here to shine the truth on Equity Release in 2025.
Equity Release Myth 1 – “I’ll lose my home If I live past 90”
Why people still believe
We still hear horror stories of repossessions, but Equity Release products have a new form of regulated standards to protect its consumers.
2025 Reality
- Home-for-Life guarantee: every Equity Release Council plan (core and hybrid) lets you stay until you die or move permanently into care.
- No-Negative-Equity Guarantee: even if house prices slump, your estate never owes more than the sale price.
Example: On a £300k home, if the eventual sale fetches £260k, the lender writes off anything above that, your heirs aren’t chased.
You keep the keys for life, your family keeps the peace of mind.
Quick check: Could equity-release work for you? Run the 60-second calculator to speak with one of our regulated partners. →
Equity Release Myth 2 – “Equity Release locks you into your house forever”
Why it lingers
Early products charged harsh penalties to move in the past, but the equity release landscape has shifted.
2025 Reality
- Portability right: move to any suitable property and transfer the loan—no extra fees.
- Care move waiver (May 2025): Early-repayment charges are wiped if you move in with family or into long-term care.
Savings snapshot: 6 % ERC on a £200k loan = £12,000 you won’t pay under the new rule.
Modern plans move when you do, or let you exit cost-free if life demands it.
Equity Release Myth 3 – “Compound interest always doubles the debt”
Why people still believe it
Old horror stories quoted 8-9% roll-up rates with no repayment flexibility, but new regulation means that horror stories are things of the past.
2025 Reality
- Pay-some-interest, shrink the snowball. Today’s flexible payment lifetime mortgages let you cover as little as 25% of the monthly interest. In return, lenders shave roughly 0.5-0.7 percentage points off the rate so the debt grows far more slowly.
- Penalty-free repayments baked in. Under the Council’s refreshed product standards, every new lifetime mortgage (core and hybrid) must allow voluntary repayments after any mandatory-payment period with no fees.
Example: Paul (68) & Dawn (67) borrowed £250k at 6.4% MER. By paying 25% of the monthly interest for 10 years they keep the projected balance to = £402k instead of £469k = £67k saved.
Compound interest is a dial, not a destiny, small and flexible payments keep it under control.
Transform your retirement with tax-free cash! Connect with our advisors who have helped thousands access their property wealth. →
Do you want to know more about the top financial reasons for equity release in 2025.
Myth 4 – “Rates Are Sky-High (8%+) and Rising”
Why we still see this myth
Headlines from late-2023 (when average rates hit 7%+) still circulate on social media.
2025 Reality
- Lowest headline rate on 6 May 2025 was 6.07% MER
- Specialist plans have already dipped below 6 %
- The market average now sits near 6.3 %, down from 7 % in 2023.
Sub-6% isn’t a unicorn, shop around, qualify and you can secure it.
Busted Myths and Final Thoughts.
If you’ve read this far, then you know more about equity release in 2025 then most of the “local pub experts”. By reading this article, you’ve learned that:
- Your home stays yours for life
- You can still move if life changes
- Compound interests are tameable
- Rates are already back at 6%
But this knowledge only pays if you act! Speak to a regulated adviser today to compare the whole of market FCA regulated products to find the best fit for you today.
Equity release is a regulated product, get personalised advice.
This article is for information purposes only and does not constitute financial advice. The suitability of equity release depends on your individual circumstances. Always seek professional advice before proceeding with any financial product.
If you’re interested in learning more about reducing your inheritance tax, click here.
