Equity release
Unlocking the value in your home to give you financial flexibility
Unlocking the value in your home to give you financial flexibility
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Equity release
Equity release is a way to unlock money from your home if you don’t want to move but do want to use your capital differently to support your life or your family. You won’t have to pay back until your property is sold, you die or you move into long-term care and it can be a good way to boost your retirement income. Equity release won't suit everybody – or every situation and it’s important to speak to an experienced financial adviser about the risks involved.
How can you qualify for equity release?
What is equity release?
Equity release allows older homeowners to access some of the value tied up in their homes. You can take the money as a cash lump sum or in several smaller amounts. People often choose this option to supplement their retirement income, make home improvements or help children or grandchildren get onto the property ladder.
How can I qualify for equity release?
You should be eligible for equity release if you meet the following criteria:
- you’re over 55;
- you’re a UK homeowner;
- your property is in reasonable condition and is worth more than £70,000; and
- you have little to no mortgage left on your property.
It may not be a suitable option if you have dependants living in the property.
How can you qualify for equity release?
Equity release allows older homeowners to access some of the value tied up in their homes. You can take the money as a cash lump sum or in several smaller amounts. People often choose this option to supplement their retirement income, make home improvements or help children or grandchildren get onto the property ladder.
You should be eligible for equity release if you meet the following criteria:
- you’re over 55;
- you’re a UK homeowner;
- your property is in reasonable condition and is worth more than £70,000; and
- you have little to no mortgage left on your property.
It may not be a suitable option if you have dependants living in the property.
Different types of equity release
Lifetime Mortgage
A Lifetime Mortgage allows you to take out a loan secured on your property, providing it’s your main residence. You can ringfence some of the property value as inheritance for your family and you can choose to make repayments or let the interest roll up. The mortgage amount, including any interest, is paid back when you die or move into long-term care.
Home Reversion
Home Reversion allows you to sell all or part of your home for a lump sum or regular payments. You can continue living there rent-free until you die, but you’ll have to pay to maintain and insure it. You can ringfence some of the property value for later use. At the end of the plan, the property is sold and the proceeds are shared according to the remaining proportions of ownership.
Pros and cons of equity release
The main advantage of equity release is that it gives you money to spend now rather than leaving it tied up in your property. However, it’s important to remember that it often doesn’t pay you the full market value for your home. It is also likely to reduce the amount of inheritance you’ll leave after you die. Our advisers can help you decide whether equity release is right for you and help you find the best deals if you choose to go down this route.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
A lifetime mortgage is not suitable for everyone and may affect your entitlement to means-tested benefits, so it is important to seek financial advice before taking any action. If you are considering releasing equity from your home, you should consider all options available before equity release.
The interest that may be accrued over the long term with a Lifetime Mortgage may mean it is not the cheapest solution. As interest is charged on both the original loan and the interest that has been added, the amount you owe will increase over time, reducing the equity left in your home and the value of any inheritance, potentially to nothing.
Although the final decision is yours, you are encouraged to discuss your plans with your family and beneficiaries, as a Lifetime Mortgage could have an impact on any potential inheritance. We would also encourage you to invite them to join any meetings with your Financial Adviser so they can ask questions and join in the decision, as we believe it is better to discuss your decision with them before you go ahead.