What Does ‘No Negative Equity Guarantee’ Mean with Equity Release?

What is the No Negative Equity Guarantee with Equity Release?

All Equity Release providers approved by the Equity Release Council will include what’s known as the No Negative Equity Guarantee in their plans. This prevents you from ever owing more than your home is worth when you use a Lifetime Mortgage.

With an Equity Release Mortgage, you don’t usually have to make any payments until the property is sold. This is usually after you pass away or move into long-term residential care. At this point, the Equity Release provider reclaims the sum you’ve borrowed plus all of the interest you’ve rolled up over the years, usually with the sale of your home.

What happens if I owe more than my home is worth?

If this figure turns out to be more than your home is worth when it’s sold on the open market, the provider cannot ask for more cash from your estate or your heirs thanks to the No Negative Equity Guarantee.

However, the entire sale price of the property will be paid over to the Equity Release provider in the event of this happening. There will be nothing left to leave from your home to any descendants.

If you’re worried about the interest on Equity Release Mortgages, you always have the option to not ‘roll up’ the interest and repay it when the home is sold.

Much like an interest-only mortgage, you can choose to make interest payments throughout the life of the loan, keeping the outstanding balance fixed rather than seeing it escalate with interest due.