What is Equity Release?
Equity release refers to a financial product that allows you to unlock cash from the value of your home. Whatever financial freedom means to you in later life — renovating your home, helping your children, or simply supplementing your income — equity release is designed to help.
There are two forms of Equity Release:
- A Lifetime Mortgage is a long term loan where you borrow money secured against the value of your home to give you a lump sum and/or a regular income. The loan is repaid to the lender when the property is sold, on death, or when you move into long term care. If there is any money left after the loan is paid off, it will go to your beneficiaries. You retain ownership of your home.
- A Home Reversion Plan, 'unlocks' some or all of the capital tied up in your home. It is not a mortgage and involves you selling your home, or a proportion of it, to a home reversion plan provider in return for either a monthly income or a lump sum. You retain the right to live in the property as a tenant (but paying no rent) until you die or move into a nursing home on a permanent basis.
Find out more in our Equity Release Guide's
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Frequently Asked Questions
What types of equity release plans are there?
There are two types of equity release plans, home reversion and lifetime mortgages.
How does a lifetime mortgage work?
A lifetime mortgage is an equity release product that allows you to access some of the equity that’s tied up in your home. It’s a long-term loan that’s secured on your property.
Even though it’s a mortgage, you don’t have to make regular repayments. The loan and interest will be paid back in full, usually by selling your property.
You’re charged interest on the amount you borrow as well as on the interest that’s already been added, so what you owe back rises quite quickly. Taking out a lifetime mortgage reduces the value you have in your home and any inheritance you leave. Your tax position and any entitlement you have to welfare benefits could also be affected
Is equity release safe?
Equity release is regulated by the Financial Conduct Authority (FCA).
The FCA is an independent organisation and reports to the Government, helping to make sure the financial products offered to the public are fair and meet certain standards.
The Equity Release Council was set up in 1991 to help protect people taking out equity release.
How long does equity release take?
Legal and Financial Advice is required when taking out equity release, so the time it takes to finish your application can vary.
How does equity release affect benefits?
Taking out equity release (a lifetime mortgage) cuts down the value you have in your home and the amount of any inheritance you leave. Your tax position and any entitlement to welfare benefits you have could also be affected.
It might affect your entitlement to means-tested welfare benefits, like council tax benefit, pension credit, and certain health benefits.
How much can I release?
You can only release a certain percentage of the value of your home. This is dependent on a number of factors such as, how old you are and the type and value of your property.
What’s the interest rate?
Lifetime mortgage interest rates are based on a number of key factors, including the provider, your individual circumstances such as your age, property value, health and lifestyle details, and how much cash you would like to release.
When you speak one of our equity release advisers, they will arrange to give you a personalised illustration which will show you your interest rate.
Are there any fees?
Your adviser will give you a personalised illustration of how your lifetime mortgage will work, and that’ll show you any fees you need to pay.
Can I take out more later?
You might be able to borrow more later if your home goes up in value or you don’t borrow the full amount that’s available to you at the start, subject to the providers lending conditions at the time.
Do I still own my own home?
Yes, and you continue to live in it until you die or go into long-term care. You need to make sure that you keep the property in good shape and it’s your responsibility to insure your property and pay any bills, like utilities and council tax.
Can I end the lifetime mortgage early?
You may be able to end your lifetime mortgage early by paying off the loan and the interest, but you might have to pay an early repayment charge (ERC).
What happens when it’s time to sell the house?
A lifetime mortgage can be repaid but usually it is using money from selling the property. If you go into long-term care, then either you or your solicitor sells the house. If you die and have a Will in place, it'll be sold by an executor looking after your estate. It there is no Will, administrators will sell your property and any money left over after the lifetime mortgage has been repaid belongs to you or your estate.
Do I have time to change my mind?
Yes, you can opt to change your mind during the application process, as long as it’s before you sign the contractual agreement.
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Independent Equity Release Advice
Being Independent means we are able to make recommendations after we have assessed your needs, based on a comprehensive and fair analysis of the relevant market. Your home may be repossessed if you do not keep up repayments on your mortgage. The Financial Conduct Authority does not regulate some forms of buy to lets, commercial mortgages, secured loans or bridging loans.
Equity Release may involve a lifetime mortgage. To understand the features and risks, please ask us for a personalised illustration. Check that this type of mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it.