Why Do People Say Equity Release Is Bad? The Truth Explained

Why Do People Say Equity Release Is Bad? The Truth Explained

If you search online for “why is equity release bad”, you’ll quickly come across negative comments, worrying opinions, and outdated advice.

At MY LATER LIFE, a trusted, multi award-winning equity release broker, we hear these concerns every day.

The reality is that many people still have the wrong impression about equity release. This is usually due to misunderstandings around compound interest and confusion about how equity release actually works.

In this article, we explain why equity release has a bad reputation — and why, for many people, that reputation is unfair.

The Main Reason Equity Release Gets a Bad Name: Compound Interest
The most common criticism of equity release is compound interest.

With a lifetime mortgage (the most popular type of equity release), interest is added to the loan each year. If no repayments are made, the interest is charged on both the original loan and the previous interest — this is known as compound interest.

This has led some people to believe that:

Equity release will take all the value from their home
There will be nothing left for their family
Equity release is always a bad idea
While compound interest is something that must be understood, it doesn’t mean equity release is bad — it means it needs to be planned properly.

Equity Release vs Mortgage: They Are More Similar Than You Think
One important point often missed in negative discussions is this:

Most people originally bought their home with a mortgage.

When you first took out a mortgage, you:

Borrowed money from a lender
Paid interest on that loan
Understood the lender needed to make a profit.

Equity release works in a very similar way.

When you release equity from your home, you are effectively taking out a later-life mortgage on a property you already own. The lender is still lending money, and just like your original mortgage, they need to make a return on that money.

The difference is how the interest is repaid.

With a traditional mortgage, you pay interest every month. With equity release, you have flexibility:

You can pay the interest
Pay some of the interest
Or choose not to make repayments and let it roll up
If no interest is paid, the loan balance grows , just as it would if you stopped paying interest on any mortgage.

This doesn’t make equity release unfair or bad. It’s simply how borrowing works.

Why Paying Interest Can Protect Your Home’s Value
At MY LATER LIFE, we always recommend that clients pay off some interest if they can afford to.

Even small, regular payments can make a big difference over time.

Check out our repayment calculator to see how just pauing off a small ammout can help with the amout of intrest you pay .

Paying interest:

Reduces or stops compound interest
Helps protect the equity in your home
Leaves more value available for the future
This approach is very similar to what homeowners have done for decades with traditional mortgages — the only difference is that equity release gives you choice and flexibility.

Modern Equity Release Is Very Different From the Past
Many negative comments online are based on old equity release schemes from years ago. Today’s products are far more regulated and designed with consumer protection in mind.

Modern equity release plans typically include:

Fixed interest rates for life
The right to stay in your home for life
A no negative equity guarantee (you’ll never owe more than your home is worth)
Clear regulation and advice standards
Despite these protections, many people still judge equity release based on outdated information.

Why We Created Our Repayment Calculator
To help people clearly understand how interest works, we created our repayment calculator.

It allows you to:

See how compound interest affects your loan over time
Understand the difference between paying and not paying interest
Explore how much equity could remain in your home
When people can see the figures clearly, fear and confusion often disappear.

Is Equity Release Right for Everyone?
Equity release is not suitable for everyone, and it should always be taken with expert advice. However, it should not automatically be seen as a bad option.

Equity release can help with:

Increasing retirement income
Clearing an existing mortgage
Helping family financially
Home improvements
Enjoying a more comfortable later life
The key is receiving advice from a specialist broker who explains everything clearly — not someone simply selling a product.

The Real Problem Isn’t Equity Release - It’s Misinformation.
Most of the negativity around equity release comes from:
Poor or no advice
Misunderstanding compound interest
Not knowing repayment options exist
Using outdated products
At MY LATER LIFE, we focus on education, transparency and long-term planning. As a trusted, multi award-winning equity release broker, our role is to help clients make informed decisions — not rushed ones.

Final Thoughts: Equity Release Isn’t “Bad” — It Just Needs to Be Done Properly
Equity release isn’t bad. Like any form of borrowing, it needs to be understood and managed correctly.

When arranged with expert advice, modern products, and the option to manage interest, equity release can be a flexible and valuable financial solution later in life.

If you’ve been put off by negative comments online, it may be time to look at the facts — not the myths.