Reviewed 13th August 2026
If you’ve heard unsettling stories about equity release, some of them describe real problems — with products sold decades ago, before the rules changed. Today’s product works differently, and this is an honest look at then and now.
In short: older equity release had real problems; today’s product is different — but different is not the same as right for you.
Where the concern comes from
In the late 1980s and 1990s, before equity release was regulated, some products had genuine problems: interest rates that could climb without limit, investment-linked schemes that could fail, and no protection to stop the amount owed passing the value of the home. Some sales practices from that era would not be allowed under today’s rules. These are the problems the industry set out to fix — first with its own no-negative-equity standard in 1991, then with statutory regulation from 2004. If that history is the picture in your head, it is not imaginary — it is memory.
Then and now
| The old picture | Today’s product |
|---|---|
| The amount owed could pass the home’s value and fall to the family | On plans meeting Equity Release Council standards, you would never owe more than your home sells for, provided the plan’s terms are met |
| Rates that could climb without limit | Rates typically fixed for the life of the plan, stated in writing before you commit |
| No way to reduce the balance | Voluntary partial repayments within yearly limits, without an early repayment charge (charges can apply beyond the limit or on early full repayment); a drawdown facility charges interest only on what you take |
| Sold, often door-to-door, without advice | Advice is required by law, with separate independent legal advice; under the Consumer Duty, firms must act to deliver good outcomes and avoid foreseeable harm |
| Move house and the plan collapses | The right to move and transfer the plan to a suitable property, on ERC-standard plans |
What hasn’t changed
Interest still compounds, so the amount owed grows over time. The plan still reduces the value of your estate. And it is still the wrong choice for plenty of people — including some of those most drawn to it. Modern safeguards make the product safer; they do not make it automatically right. Sorting one from the other is exactly what good advice is for — which is why it sometimes ends with “not this, and not now.”
How to tell a modern firm from an old-style one
Watch how a firm behaves. A good one is open about how the interest adds up over the years, welcomes your family into the conversation, explains its fees before you ask, looks across more than one lender’s plans, and never hurries you. Pressure, urgency and vagueness belong to the old world. You are free to walk away from them — we would encourage it.
Risk warning. Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration.
If you’d like to understand whether today’s product could be right for you and your family, you can speak to an adviser for a no-obligation conversation, in your own time.
Frequently asked questions
Are the old equity release stories true?
Some describe real problems — but mostly with products sold decades ago, before equity release was regulated in 2004. Two risks that people rightly worry about do still exist, so it is worth being plain about them. First, interest compounds: interest is added to the loan, and future interest is charged on the larger balance, so the amount owed grows over the years and can build up significantly. Second, because the loan and its interest are repaid when your home is sold, there is less left in your estate to pass on — sometimes much less. Today’s plans reduce these risks with fixed rates and the option to make voluntary repayments, and on plans meeting Equity Release Council standards you would never owe more than your home sells for, provided the plan’s terms are met. Advice is there to weigh all of this against your own circumstances.
Is modern equity release safe?
It is far more protected than the old products, but it still carries real risks. Interest still compounds, the amount owed grows over time, and it reduces the value of your estate. “Safer than it was” is not the same as “right for you” — which is why advice is required before you proceed.
How do I avoid a bad equity release deal?
Look at how a firm behaves. A good one is open about how the interest adds up, includes your family, explains fees up front, compares plans from more than one lender, and never rushes you. If you feel pressured or kept in the dark, walk away.
This article was last reviewed and dated 13th August 2026. We review it periodically to keep the regulatory detail current.
