What is Equity Release?
- Equity Release is not always the right option. There may be other routes available to obtain a similar amount of money. You should seek professional advice before deciding whether an equity release scheme is right for you
- Equity release may affect your entitlement to state benefits due to the increase in your capital and income
- You may want to consider the impact on your estate, as your loved ones will not inherit your home when you die
- You must maintain your home to a decent standard. If not, your equity release provider is entitled to arrange repairs that you would have to pay for
- Arrangement and advice fees may be payable.
Equity release schemes
- Available to UK residents aged 55+
- You take out a loan secured on the value of your home and accrue interest on the loan which is added to the loan amount
- You retain ownership of your property
- The money is paid to you as a one off tax-free lump sum or drawn down in smaller amounts over a period of time
- You don’t have to make regular repayments, as the loan plus interest is only repaid when your property is sold
- When the property is sold, the amount owed including interest, will be paid to the provider and any surplus, if there is any, will go to you or your estate
Bear in mind…
- If you choose to repay the loan, early repayment charges may apply
- You can’t be certain of any money going to your estate after the loan has been repaid, unless your mortgage lets you fix a percentage of the value as inheritance
- Depending on how much you borrow and how long you live, you could be left with little or no equity in your home
Home Reversion Plan
- Available to UK residents aged 65 and over
- Allows you to access all or part of the value of your property while retaining the right to remain in your property, rent free, for the rest of your life
- You sell all or part of your house in exchange for a cash lump sum taking into account your age and your health
- There is no day-to-day interference and no restrictions on treating the house exactly as before; as a private home to live in freely
- The percentage you retain in your property will always remain the same regardless of the change in property values, unless you decide to take further cash releases
- Your share can be left as an inheritance, although the property itself can’t be passed on.
Bear in mind…
- You will no longer own all of your home
- The share of your property you sell, is sold for considerably less than the market value
- Your estate will not benefit from any increase in house prices on the share of the property you sell.
Frequently asked questions
The ‘equity’ in your home is the market value of your home, minus any mortgage or debt you have against the property.
This will depend on the value of your home and your age. It’s likely that the older you are, the more equity you can release.
You usually must be mortgage free, however if you have a small mortgage, some equity release schemes allow you to pay off your mortgage with part of the money you release.
It must be built out of bricks and mortar. You must also own a freehold property or one with a long lease.
Yes, under most schemes you can, however fees may apply.
If you have a partner the equity release scheme should be in both names so your partner can continue to live in the home under the same arrangements.
If you both permanently move into a care home, the scheme will usually end and the property will be sold. If just one of you moved to a care home, or if care was provided at home, your equity release scheme will usually continue as is.
Lifetime mortgages offer a ‘no negative equity guarantee’ safeguard upheld by Equity Release Council members, which ensures you will never have to repay more than the value of your property.