What is equity release?
It’s simple, really. Equity release lets you get cash from the value that’s tied up in your home. And you don’t have to move house or downsize. It’s a popular way to get the money you need to enjoy the retirement you deserve.
5 key reasons why equity release is becoming
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When you release equity from your home
How much equity could
The amount of equity you can release depends on your age, house value, and on how much of your mortgage is paid off. Most people release between 20-50% of the equity in their home, typically between £10,000-£100,000.
Because house prices have risen over the years, the equity you have in yours could be significant.
For example, if your home is worth £250,000 and you have an outstanding mortgage of £50,000, you would have £200,000 equity.
To find out how much equity you could release, try our 60 second calculator below.
What are the different types of equity release?
The most popular way to release equity is with a lifetime mortgage.
This is a loan secued on your home. You still own your house and there is no requirement to make monthly repayments.
Instead, the loan and interest are repaid when your home is sold, which is usually when you pass away or move into permanent care.
The are different types of lifetime mortgages.
Roll-up lifetime mortgage
This gives you a cash sum with no monthly payments.
Drawdown lifetime mortgage
This lets you release your cash over time rather than just taking one lump sum. So you can access your cash when you need it, and interest is only charged on the amount you've taken.
Interest-only lifetime mortgage
This lets you access a cash lump from your home, but rather than rolling up interest over the years, you pay off a certain amount of interest monthly.
There are other types of lifetime mortgages available, plus home reversion (where you sell all or part of your home).
What are equity release interest rates?
At the moment, equity release interest rates are at the lowest rate in five years. The average interest rate for people who use the SunLife Equity Release Service is 3.48%1 however depending on your circumstances rates can be lower than 3%.
This table shows an example of how interest could grow on a roll-up lifetime mortgage, where interest compounds yearly.
The original loan is £50,000 and the interest rate is 4%.
|Year||Loan||Interest at 4%||Total owed|
This loan will be repaid from the sale of your home, either when you pass away or move into permanent care.
Interest rates depend on your age and circumstances, and with some plans give you the option to make repayments. Call us on
0800 633 55 66 to talk to an expert adviser about your options.
Is equity release safe?
You might be reassured to know that today’s equity release market is regulated by the Financial Conduct Authority.
Our expert partner, Age Lifetime, is also a member of the Equity Release Council. They are a trade body whose members must follow a strict code of conduct.
Their safeguards include:
Could equity release leave my family in debt?
There’s no need to worry. The amount owed will never be greater than the value of your house, so you can’t leave your family in debt with equity release (even if your house falls in value). The debt will be repaid from the sale of your home, either when you pass away or move into long-term care.
In fact, you could ringfence some of your home’s value to leave as a legacy. So while you can’t leave your loved ones your property, you could leave them a cash inheritance, just make sure to tell your financial adviser you’d like to do this.
The pros and cons of
Equity release isn’t right for everyone, so it’s important to understand the pros and cons. We’ve outlined a few of them below, but it’s important to get advice from a financial adviser before making any decisions.
- Tax-free cash for retirement
- Stay in your own home
- No need for monthly repayments, although you can choose to with some plans available
- You can’t owe more than the value of your home, so you won’t pass on debt
- Reduced inheritance for your family
- Interest is added and can grow quickly
- Benefits may be affected as your income and/or savings will increase
- There may be fees to pay (You can use some of the money you release to cover this)
Releasing equity with SunLife usually takes around 8-12 weeks. There are just five simple steps:
- Call our friendly team on 0800 633 5566 for your free eligibility check.
- Speak to a qualified financial adviser.
- Fill in your application – your adviser can help you with this.
- Talk to a solicitor.
- Get your money to spend as you wish.
- 90% of lifetime mortgage customers release equity within £10,000 – £100,000 or more. The amount released will depend on your age and value of your property.
- You continue to own your house with a lifetime mortgage which is a debt secured against it. The value of equity released, plus accrued interest, is to be repaid upon death or moving into permanent long-term care.
- If you have an existing mortgage, you must use the money you release to pay it off first.
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Answers to your questions
A: Yes, we can still refer you to an expert who will be able to offer you advice over the phone.
A: The ‘equity’ (or cash) in your home is its market value, minus any mortgage or debt you have against it.
for equity release?
A: To release equity, you need to be aged 55 or over, own a home worth at least £70,000, and have paid off your mortgage or only have a relatively small mortgage remaining. (You’ll need to use the equity you release to pay off any remaining mortgage, but you can spend the rest as you wish.)
right for me?
A: When you call the SunLife Equity Release Service, we’ll refer you to an equity release expert adviser from Age Lifetime. They’ll help you decide whether equity release is right for you.
can I release?
A: That depends on a lot of things, like the type and value of your home, and your age when you start your plan. It’s likely that the older you are, the more equity (or cash) you can release. Feel free to use our equity release calculator as a guide.
sell my home?
A: With many equity release schemes, the answer is yes. Just be aware that certain conditions may apply and there may be fees to pay. Your Age Lifetime adviser can discuss this in more detail with you.
A: No, because equity release mortgages from an Equity Release Council member come with a ‘no negative equity guarantee’ to protect you – so you’ll never owe more than the value of your home.
A: If you release equity from an Equity Release Council member, you have the right to remain in your home until you die or move into permanent care. Only then will your home be sold and the outstanding equity release loan be repaid.
A: No. Usually, equity release loans are repaid when you die or go into permanent care and your home is sold. Any equity value left over can be passed on as an inheritance. Depending on your equity release plan, you may be allowed to make regular repayments off the interest on your loan.
A: This depends on your equity release provider. There are often early repayment fees, so it’s best to check with your provider and a financial advisor before making any decisions.
A: Today’s equity release market is regulated by the Financial Conduct Authority (FCA). And our expert partner, Age Lifetime, is also a member of the Equity Release Council – a trade body whose members must follow a strict code of conduct.
A: The Equity Release Council (ERC) is a dedicated industry trade body. It represents providers, qualified advisers, intermediaries and surveyors who work in the sector – and all members have to adhere to the Council's Statement of Principles, which are there to provide important safeguards for you. You can find out more at equityreleasecouncil.com.
into permanent care?
A: This depends on the type of equity release plan. Generally, with a lifetime mortgage, your family would need to sell the property and then repay the debt with the money from the sale. Whereas with a home reversion plan, your equity release provider would need to sell it. The loan usually needs to be repaid within 6-12 months of your passing. It’s always best to speak to the plan provider to confirm what needs to be done.
A: We’re so confident that our partner, Age Lifetime, will find you the best deal on the market, that if you can find a better quote elsewhere, they’ll either match it or give you £500. You can find all the details in the price match guarantee terms and conditions.
A: The free gift is a SunLife Fingerprint forensic property marking kit worth £59. The kit includes a virtually invisible solution that you can apply to your belongings. Even the slightest trace allows the police to identify you as the rightful owner of lost or stolen goods, so they can be returned to you. You’ll also receive stickers for your window to help deter burglars from your home.
To be eligible for this free gift you’ll need to enquire through the SunLife Equity Release Service and go on to release equity from your home. You’ll receive your free gift within 30 days of your completion date. You can find all the details in the free gift terms and conditions.
If you have an existing equity release plan which you make regular repayments on, but are struggling financially due to Covid-19, you may be able pause your monthly payments by contacting your lender.
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* Free FingerPrint DNA kit worth £59. Full terms and conditions apply.
^ This is currently the lowest rate available through Age Lifetime (as at 24th September 2020).
1. Based on Age Lifetime completions between 18/11/19 and 30/04/20.