An increasingly popular way to unlock some of your property’s value, as a tax-free lump sum or additional income.
We are both Independent Financial Advisers and Mortgage Brokers, a combination which helps us deliver the best advice on Equity Release we can for our customers.
Equity release is a way of unlocking the value you’ve built up in your home, taken as a lump sum or monthly income. There’s no need to move out and you’ll still own your home.
The money you unlock through equity release is all tax-free and can be spent in a variety of ways. So, whether it’s repaying your existing mortgage, supporting your loved ones when they need it most or simply boosting your retirement finances, Equity Release could help you live the later life you want.
With Equity Release you don’t have to make monthly payments, unless you choose to. It’s usually repaid when the last borrower moves into long term care or dies.
If you own your own home and are 55 or over, then Equity Release may be available to you.
There are different types of Equity Release, with the most common type being the Lifetime Mortgage.
A Lifetime mortgage (or Equity Release mortgage) is a specialised loan that is secured against your home, allowing you to take advantage of your property’s value. There is no need to make monthly repayments (although you can make repayments if you wish) as the Lifetime mortgage is only repaid, with any remaining interest, when the loan comes to an end. This is usually when you pass away or move into long-term care. Any remaining equity in your home after the loan is repaid can be passed on as an inheritance.
There are a variety of features that can be added to a Lifetime mortgage, such as a negative equity guarantee, inheritance protection, a reserve account, or no monthly payments. Being able to choose the features and protections of your Equity Release plan can help you personalise it to your unique situation and needs.
Equity release funds are not only tax-free, they can be used for anything you wish (providing it is legal!).
How much equity you can release, if you’re eligible, is based on the value of your house. It’s usually between 20% and 60% of your property’s value for a Lifetime/Equity Release mortgage. For a Home Reversion scheme, you can usually sell between 25% to 100% of the property value. However, the cash you receive will be discounted and you can usually expect to be offered between 30% and 60% of its true market value at the time of signing.
The maximum equity you can borrow depends on different factors, like the value of your home, health and your age.
Ideally the older you are, the more money you can get, as a percentage of your property value.
A medically enhanced equity release plan, due to poor health, can allow you access to larger release amounts. If the lender believes you will live shorter than average, they will anticipate being repaid sooner, and treat you as if you were older.
There are 2 main types of Equity Release, a Lifetime Mortgage and a Home Reversion Plan.
Our specialist equity release advisers will not only discuss all types of Equity Release, but always discuss other alternatives to equity release with you to make sure you’re making the right choice.
This is the most common type of equity release. You borrow money secured against your home. You retain ownership of your home and when sold, the loan plus any accrued interest is repaid to the lender and the remainder is retained by you.
With a Home Reversion plan the provider buys all or part of your property in exchange for a lump sum or income. You retain a legal right to remain in your home for your lifetime or you decide to move.
At this time, the property is sold and any proportion not owned by the provider is retained by you.
We answer some of our most commonly asked questions below. But if you would like to know more then please get in touch and we will be happy to answer any query you may have.
Equity release is safe because providers are regulated by the Financial Conduct Authority (FCA) and governed by the Equity Release Council (ERC)
With lifetime mortgages, you always own your home and any increase in its value is yours. An important feature in today’s equity release plans is the no negative equity guarantee, which means you’ll never owe more than the property is worth when it is sold.
Equity release interest rates can be fixed for life, so you do not have to worry about any potential rate hike, payments going up, or more interest being added to the mortgage in the future. We will go through this with you to make sure you are happy with any payments for your new equity release mortgage before you decide to commit to anything.
This is a common concern, but no, you do not usually have to sell your home if your partner dies. If you are both named on the Equity Release then the need to sell only comes after the last person dies or enters into long term care.
The idea behind downsizing is simply to release funds and reduce financial burdens by moving to a new, smaller home. The difference in value between your current home and new home ends up in your bank account (once expenses have been paid), allowing you to invest it where you see fit.
Equity release on the other hand means you can stay where you are and receive your lump sum or income, are but it will impact any inheritance you plan to leave to family.