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How does equity release work?

Heard about equity release but not sure what it means for you? Don’t worry, we’re here to explain things and make equity release and the processes that go along with it a bit easier to understand.

a mature couple looking through their finances

Unlocking the cash tied up in your home

There’s more than one way to release equity from your property. Some people will decide to sell up and downsize to a smaller property. But what if you don’t want to move out of the home you love – where you’ve made lots of happy memories over the years?

If you’ve been wondering how to release equity from your home, then you may have come across equity release. Especially as it’s becoming more and more popular with homeowners age 55 and over. In fact, on average, someone unlocks tax-free cash from their home every 15 minutes – and they’re using it to make the retirement they’ve always dreamed of a reality.

piles of coins sitting on a spreadsheet next to a calculator

But what is equity release and how does it work?

First things first…

The ‘equity’ in your home just means the market value of your home less any loans or debts (like a mortgage) you have secured against it. Here’s a quick example: if you decide you’d like an extra £20,000 to make home improvements, and your house is worth £200,000 and you’ve still got £10,000 mortgage to pay, then you’d have £190,000 of equity in your home, which the £20,000 would be deducted from.

Equity release is all about taking this ‘equity’ out of your house – and the cash sum (which would be £20,000 in the example above) is completely tax-free. Equity release gives you the chance to use the money tied up in your house – whether that’s topping up your pension, booking the holiday of a lifetime, or seeing loved ones enjoy their inheritance in your lifetime. Oh, and you won’t have to move to a new house to make all this possible.

Equity release: how does it work?

To be eligible for an equity release plan, you’ll need to be a UK homeowner age 55 or over. Even if you still have a small mortgage on your property, you could still be eligible – you’ll have to pay it off using the money you release.

Once you’ve accessed your money – which is yours to spend as you like – you won’t have to make any monthly repayments. The loan (plus interest) is simply paid back when you sell the house – which will usually be when you pass away or move out permanently (into residential care).

There are varying types of plans, the two main types being lifetime mortgages (the most popular option) and home reversions schemes, which you can find out more about in our equity release guide.

a mature couple talking with an adviser

It’s a straightforward process

So, once you’ve done your research and considered your options, you may want to get the ball rolling. The equity release process can vary from person to person and provider to provider, but you’ll have plenty of support along the way. Here’s an idea of the steps you can expect.

  • Have a FREE chat with the SunLife Over 55 Equity Release Service to find out whether you’re eligible. You won’t have to take things any further if you don’t want to
  • Talk to an equity release adviser – over the phone or in person, in the comfort of your own home. Your Age Partnership equity release adviser will answer your questions and help you decide whether this is the best solution for you. The advice you’re given will be confirmed to you in writing before any further decisions are made
  • Arrange a follow up meeting to talk through the advice that was given to you. You’ll be able to ask any remaining questions that you might have and make sure you’re ready to proceed with the process. And when you’re ready…
  • Fill in your application with the help of your adviser. They will even submit the application for you, and if it’s accepted, the provider will give you a valuation
  • Talk to a solicitor about your offer to make sure you get independent legal advice. They’ll check all the legal details and talk you through them. Age Partnership will provide a list of recommended specialist independent equity release solicitors. And if you accept, your equity release scheme will be set up for you
  • Get your money through your solicitor – and get on with putting those plans into place

See? We told you it was straightforward. You’ll have all the guidance you need along the way. And when it’s done, you’ll have access to the cash you need for the retirement you deserve.

How soon can I release equity from my home?

So, how long does equity release take? Well, it varies from provider to provider. But taking equity out of your home usually takes around 8 to 12 weeks – from the day the provider receives your application to the day your solicitor sends you your money.

Just like any financial decision, bear in mind that equity release isn’t something you should rush into. So take the time you need to consider your options and decide whether it’s right for you. It’s also good to remember that taking out a lifetime mortgage will reduce the inheritance you leave your loved ones, so it’s a good idea to involve them in the decision too.

How much does equity release cost to set up?

That depends on lots of different things – like the type of equity release scheme and the provider. In most cases, there are fees and costs when you take out equity release. These include:

  • Arrangement fees
  • Advice fee
  • A valuation fee (to value your property)
  • Your legal costs (your solicitor will give you a breakdown of these)
  • Buildings insurance (to make sure you meet your lender’s requirements) – if you haven’t got some in place already

Your financial adviser will talk you through all of this if you decide to go ahead with equity release (the SunLife Over 55 Equity Release Service can put you in touch – and book you in for a FREE appointment). You’ll be able to ask them anything you like.

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How much equity could you release?

Find out in seconds how much tax-free cash you could unlock with our free online Equity Release Calculator.

Whenever you’re ready, we’re here for you

For more information and to check your eligibility, call The SunLife Over 55 Equity Release Service today on 0800 633 5566 or request a call back.

Here's the information that you need to know about who we are and the other companies that we work with in order to provide our products and services.

Who are SunLife?

Phoenix Life Limited trades as SunLife and is the provider of the Guaranteed Over 50 Plan, SunLife Insurance and the life insurance policy payment option for Funeral Plans. Phoenix Life Limited’s registered office is at 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 1016269). Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

SunLife Limited distributes financial products and services and is a company limited by shares, registered office: 1 Wythall Green Way, Wythall, Birmingham, B47 6WG (registered in England, no. 05460862). SunLife Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (registration no. 769427).

You can contact us by post at SunLife, PO Box 1395, Peterborough, PE2 2TR or by phone on 0800 008 6060.

If you choose to add Funeral Benefit Option to your Guaranteed Over 50 Plan the funeral services are arranged and provided by Dignity Funerals Limited. Dignity Funerals Limited is a company registered in England and Wales No. 00041598. VAT registered No. 486 6081 14. 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands, B73 6AP. Telephone No. 0121 354 1557. Fax No. 0121 355 808. Part of Dignity plc. A British Company. Dignity is not authorised or regulated for this activity by the Financial Conduct Authority or the Prudential Regulation Authority but is a member of the National Association of Funeral Directors.

Who provides the Funeral Plans?

Dignity Funerals Ltd arranges and provides the funeral services. Dignity Funerals is not authorised or regulated for this activity by either the Financial Conduct Authority or the Prudential Regulation Authority. Dignity Funerals Ltd is a member of the National Association of Funeral Directors.

The life insurance policy that pays for your funeral will be provided by Phoenix Life Limited, trading as SunLife.

Who provides My Smarter (ISA)?

My Smarter (ISA) is provided by Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority. Details can be found on the Financial Services register, registration No. 188832. Member of The Investment Association. Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.

Who provides the Will writing services?

Hugh James is authorised and regulated by the Solicitors Regulation Authority (SRA Number:303202).

The information contained on this website is based on Hugh James' understanding of the law of intestacy in England and Wales only as at April 2014. The law in Scotland and Northern Ireland is significantly different. This is for information purposes and is not intended to be legal advice.

Who provides Family Life Insurance?

SunLife Family Life Insurance is provided by Scottish Friendly Assurance Society Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Details can be found on the Financial Services register (registration number 110002). Registered Office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ. 

Who provides SunLife Pet Insurance

SunLife Pet Insurance is arranged and administered by BDML Connect Limited. BDML Connect Limited is authorised and regulated by the Financial Conduct Authority (No. 309140). Registered in England and Wales Number 02785540. Registered Office: 45 Westerham Road, Bessels Green, Sevenoaks, Kent, TN13 2QB.

Who provides SunLife Home Insurance

SunLife Home Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.

Who provides SunLife Car Insurance

SunLife Car Insurance is arranged and administered by BISL Limited and underwritten by a panel of insurers. BISL Limited are an intermediary authorised and regulated by the Financial Conduct Authority. Registered in England no. 03231094. Registered office Pegasus House, Bakewell Road, Orton Southgate, Peterborough PE2 6YS.