Equity release

Unlock cash from your home with equity release.

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What could equity release do for you?

Support a comfortable lifestyle in retirement

Help children with house deposits or tuition fees

Pay off debt like mortgages, credit cards and loans

Fund a one-off purchase like a car or holiday

Help efficiently plan for inheritance tax liability

Cover repair bills or invest in home improvements

Frequently asked questions

Is a lifetime mortgage the same as equity release?

A lifetime mortgage is a type of equity release product. They are the most popular type, making up more than 99% of plans, which is why people often use the term equity release when referring to a lifetime mortgage.

Who is eligible for equity release?

In order to qualify for a lifetime mortgage, you must be aged 55 or over and own a property in the UK that is your main residence with a value of at least £70,000.

If you are applying with a partner, the youngest person must be at least 55 years old.

Can I sell my house if I have equity release?

Yes, you retain ownership of your home and are free to sell your house and repay your equity release product at any time.

How much can I borrow with equity release

You can usually borrow between 20% and 60% of your property's value with a lifetime mortgage.

Do you pay monthly for equity release?

With a lifetime mortgage, there are different options for repayment. There are no mandatory payments, the interest does not have to be paid regularly. Borrowers can pay some or all of the interest as it falls due or add it to the mortgage, The borrower decides when and how much, if anything, they want to pay. There is always an option to repay up to 10% if the amount originally borrowed every year.

More about equity release

What is equity release?

The value tied up in your home, less any borrowing against it, is known as equity. For example, if a house worth £350,000 and there is a mortgage of £50,000, the equity is £300,000. Of course, if there is no borrowing against the property, the equity is the same as the value of the house.

The problem for many people in retirement is that they have considerable equity in their home, but they can’t make use of it. In some ways, all that has been achieved by the rapid increase in house prices over the last few decades is to generate an inheritance tax liability when the property is transferred to their beneficiaries. Equity release is a process that allows people to withdraw some of that equity in cash.

What types of equity release are available?

There are two separate ways to release equity. One is to borrow money using your home as security with the expectation that the loan will be paid off when you are no longer here. In this way, you will always be the owner of your home. You can choose whether to pay all or some of the interest or even pay off some or all of the capital borrowed. The most flexible option is a Lifetime Mortgage, but you may also qualify for a Retirement Interest Only (RIO) mortgage or even a standard residential mortgage.

The second option is to sell part or all of your home for a heavily discounted price and retain the right to live in it until death or the need to go into full time care. This is called a Home Reversion Scheme and might provide a much higher level of cash than a borrowing solution. It is not generally a popular choice with homeowners who don’t want to give up ownership of their home.

We’ll help you to compare options here.

What can equity release be used for?

If you have no other access to funds, equity release might be needed for essential expenditure. This includes, for example, settling a standard mortgage if retirement has come sooner than expected or paying for essential repairs. Some people have used equity release to provide part of a divorce settlement so that one of parties is able to continue to live in the family home.

Some people might not have such an urgent need for the money but choose to give themselves a more interesting retirement by using some of the equity in their home. It can be used to pay for travel, buy a holiday home or a better car, or it might be used to provide additional facilities at home like a conservatory or beautifully landscaped garden. It might just be used to support monthly expenditure.

A further reason might be to provide a gift for beneficiaries in anticipation of them inheriting your estate. This could help with a house deposit or student debts, or just for the benefit of seeing your loved one’s benefit during your lifetime. Under certain circumstances, this gift might also help reduce the inheritance tax your estate will pay one day.

What are the risks of equity release?

There are some horror stories about equity release and how people suffered from inappropriate and badly arranged products in years gone by. This is no longer the case since advising on Equity Release is heavily regulated by the Financial Conduct Authority. You might also want to check that your adviser adheres to the principles of the Equity Release Council. But there are some disadvantages you should consider.

If you are entitled to state benefits, taking cash out of your home might have an impact on that entitlement. It is important to carry out equity release carefully to prevent loss of benefits.

Using any kind of Equity Release will have an impact on the value of your estate and reduce the amounts that will be paid to your beneficiaries. Even though you may have good pensions now, they may not keep up with increases in the cost of living. If you take out large amount of equity release when you are relatively young, there may not be enough equity available to provide support as you get older.

That being said, equity release can be an ideal solution for later-life borrowing and it’s worth a chat with an adviser to see if that might be the case for you.

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