According to Age Partnership, nearly three-quarters of homeowners have no idea what the lack of negative capital guarantees means in capital-released loans.

The equity release lender conducted a survey of 1,001 homeowners aged 55 and over, which asked the question: “In the context of equity release, do you know what equity guarantee means? not negative?” He found that 71% answered no.

This guarantee covers loans, regulated by the trade body Equity Release Council, and means that borrowers, or their estates, will never owe more than their properties are worth when they are sold.

The survey also found that when homeowners were asked their opinion on releasing equity, 23% thought they would lose their home.

He adds that the findings “highlight the general public’s lack of understanding of safeguards, which could impede potential market growth.”

The survey also found that 67% of owners also said they had little or no understanding of the impact interest rates can have on capital release plans.

However, the report states that for borrowers who had taken out equity release products, 71% of them said that safeguarding the non-negative equity collateral influenced their choice to take out the loan.

Matt Stirland, senior lending director for Age Partnership, said: “Overall there is still a lack of knowledge in the minds of the general public about the capital release option and how the product has evolved positively over the past few years.

“It’s our job as advisors to educate the public about the benefits, features and warranties. I think we’ve come a long way in education over the past few years, but this research shows how much more needs to be done.

Equity Release Council chief executive Jim Boyd adds: “The council has long held the view that, while equity release may not be for everyone, it should be on the list. control of each owner to consider later in life.

“Today’s products offer functionality and flexibilities to meet a wider set of needs than ever before. This can range from the most affluent customers looking to gift money to loved ones to those looking to supplement their retirement savings.

“The No Negative Effect Principal Guarantee is part of a unique set of protections that means customers don’t have to worry about leaving debt to loved ones, losing their home for missing repayments or being affected by rising interest rates on existing loans.

“However, it is clear that the industry and policy makers still need to work together to change consumer mindsets about the primary role of real estate wealth in planning for future life, as well as product specifics.

“For consumers, there is a real opportunity to demonstrate how equity release can be part of a series of practical solutions to improve living standards in retirement and produce positive results across generations.”