Almost three-quarters of homeowners have no idea what the no negative equity guarantee in equity release loans means, according to Age Partnership.

The equity release lender conducted a poll among 1,001 homeowners aged 55 and over, which asked the question: “In the context of equity release, are you aware what the no negative equity guarantee means?” It found that 71% answered, no.

This guarantee covers loans, governed by trade body the 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 of equity release, 23% of them believed that they would lose their home.

It adds that the findings “highlight the general public’s lack of understanding for the safeguards, which could be holding back potential growth in the market”.

The poll also found that 67% of homeowners also said that they have little or no understanding of the impact that interest rates can have on equity release plans.

However, the report says for the borrowers who had taken out equity release products, 71% of them said that the safeguard of the no negative equity guarantee influenced their choice to take out the loan.

Age Partnership director of later life lending Matt Stirland says: “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.”

Equity Release Council chief executive Jim Boyd adds: “The council has long championed the view that, while equity release is not suitable for everyone, it should be on every homeowner’s checklist to consider in later life.

“Today’s products offer features and flexibilities to suit a broader set of needs than ever before. This can range from wealthier customers seeking to gift money to loved ones to those who wish to supplement pension savings.

“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.”