More than seven in 10 homeowners (71%) have no understanding of the “no negative equity guarantee” when it comes to equity release, a new study has indicated.

The research, commissioned by equity release advisory firm Age Partnership, highlighted the general public’s lack of understanding for the Equity Release Council’s safeguards.

For anyone considering equity release, the safeguards established by the Council provide a level of reassurance and protection, however, Age Partnership stated that a lack of understanding could be holding back potential growth in the equity release market.

The study, which surveyed 1,001 homeowners aged 55 and over, also asked respondents about their opinion of equity release, with 23% of respondents believing that they would lose their home. Elsewhere, 67% of respondents also said that they have little or no understanding of the impact that interest rates can have on equity release plans.

Director of later life lending at Age Partnership, Matt Stirland, commented: “This data highlights that the equity release safeguards are incredibly powerful for anyone who has started their equity release journey. But for prospecting clients they are simply not understood.

“Overall, there is still a knowledge gap in the minds of the general public about the option of equity release and how the product has positively evolved over recent years. It’s our job as advisers to educate the public about the benefits, features and safeguards. I think that we have come a long way in the education piece over the last few years, but this research just shows how much further there is to go.”

As part of the research, Age Partnership also surveyed its completed equity release clients, with these results highlighting more of a contrast. For the completed equity release clients, 71% of respondents said that the safeguard of the no negative equity guarantee influenced their choice to take out equity release.

Furthermore, 82% of completed equity release customers said that they were happy to discuss that they had taken out equity release with their friends. For the general public who haven’t taken out the product, 69% also said that it is something that they would be willing to discuss with their loved ones.

Commenting on the Age Partnership findings, CEO of the Equity Release Council, Jim Boyd, added: “These findings reinforce the many benefits of equity release for homeowners that are equipped with the right information and understanding of the products available.

“Council standards have underpinned high customer satisfaction and low complaint rates, helping to bring equity release into the mainstream of financial services and encourage more firms into the market. The ‘no negative equity guarantee’ is part of a unique set of protections that mean customers needn’t worry about leaving debt to loved ones, losing their home for missing repayments or being hit by interest rate rises on existing loans.

“However, there is clearly still a need for industry and policymakers to work together to shift consumer mindsets on the overarching role of property wealth in later life planning, as well as product specifics. For consumers, there is a real opportunity to demonstrate how equity release can be one in a series of practical solutions to boost retirement living standards and deliver positive outcomes across the generations.”

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