How to avoid equity release scams

The size of the equity release market has been growing in recent years and while in 2020 the amount released to homeowners reduced by 4% to £3.5bn – it continues to be a significant market attracting more than 40,000 customers every year.

Demand is likely to continue due to increasing property prices, low interest rates for equity release and the desire for borrowers to bolster finances during the pandemic. Equity release advisers Key found the most frequent reasons for using equity release in 2020 was to improve day-to-day finances or to give cash gifts to family members. We have also reported on the highly competitive interest rates now available on lifetime mortgages (the most common form of equity release.)

The fact that equity release borrowers must be over the age of 55, combined with the sizeable market and strong consumer demand makes this an appealing area for scammers to target.

The most common equity release scam was first reported in 2019. Disreputable comparison sites were encouraging consumers to provide their contact details in the belief these would be used to create a personalised quote for a lifetime mortgage. In fact, these details were sold onto marketing agencies who then bombarded consumers with calls and emails to try to extract further information. This would then be sold on again to the highest bidder.

Moneyfacts.co.uk as a reputable comparison site, is registered with the Financial Conduct Authority and does not collect personal details on the site. We only link to legitimate lenders and brokers for our visitors to then contact if they wish. For equity release we have selected HUB Financial Solutions as our preferred equity release broker. Their experienced and qualified advisers can provide full regulated advice and have access to all of the equity release lenders in the market.

Consumers worried if a business contacting them is regulated can check this on the Financial Conduct Authority’s register. There is also help and information available about scams at ScamSmart and Take Five.

Our aim is to help more people understand how equity release works and its benefits and risks. That is why we have written a collection of impartial equity release guides.

• How equity release works
• Tax and equity release explained
• What are the different types of lifetime mortgages?
• What is an interest-only lifetime mortgage?
• What to expect when you receive equity release advice
• Six reasons to speak to an equity release adviser
• Busting myths about equity release
• How does equity release affect state benefits
• Equity release jargon buster
• Equity release FAQs