Equity Release FAQs

Equity release is a way to unlock the ‘equity’ or value in your property as a cash lump sum that can be spent on other things. People release equity in their home for a huge variety of reasons, from moving to a new home or helping family onto the property ladder, to clearing other debts or making an investment elsewhere.

Your ‘equity’ is the value of your property minus any mortgage or loan secured against it.

There are two types of equity release: 1) Lifetime Mortgage and; 2) Home Reversion Plan. A lifetime mortgage will allow you to borrow a proportion of your home’s value with a fixed or capped interest rate. In a home reversion plan, a provider will purchase a percentage share of your home at below market value, and you can continue to live rent-free as a tenant until you die. When the property is sold, the proceeds are split based on the percentage share you and the lender each own.

You can apply for a lifetime mortgage if you are aged 55+. For a home reversion plan you will need to be 65+. There may be other criteria or terms and conditions that individual providers impose – for more personalised advice or to find the best lifetime mortgage deal for your situation, please get in touch.

There are many ways you can use your property and mortgage to either release capital or improve your monthly mortgage repayments. You could look at downsizing your home, or see if there is a remortgage option that would put you in a better financial position. As we are fully qualified in standard and residential mortgages, as well as lifetime mortgages, we will be able to help establish which mortgage type is best suited to you and your situation – just get in touch.

Home reversion plans don’t involve any repayments to that provider, but if property prices rise substantially you and your beneficiaries may lose out significantly on the value in your home.

Lifetime mortgage plans will typically not commit you to make a monthly repayment, but offer flexibility in making repayments should you wish to. We can work with you and your situation to find the plan best suited to you that will allow you to take the cash you need and make the repayments you want while avoiding any penalties.

The amount you are able to leave your loved ones when you die will be affected, and some of your state benefits may also be affected. We recommend speaking with a Citizen’s Advice Bureau who can understand how much money you want to take, what for and when, and can then explain the impact this may have on any benefits you are currently receiving.

Equity release first and foremost allows you to take a cash lump sum that can be spent or invested somewhere else in your life. This could be to purchase another home, clear debt, enhance your retirement, financially assist family or for a combination of other reasons. If you take a lifetime mortgage, you will also continue to own 100% of your home so you can still benefit from any future increase in value. Lifetime mortgage interest rates are also typically fixed for life.

The maximum amount you can borrow depends on the value of your property, your age and your health. The older you are, the more of your property value you may be able to take, but this can also attract higher interest rates. We highly recommend you only take the amount you need rather than the maximum, although we know it’s tempting! If you take the maximum, the higher interest rates can seriously erode the remaining value in your estate.

A lifetime mortgage is finance secured against your property. By taking out a lifetime mortgage, you will receive a tax-free cash lump-sum that you can use for many different reasons, including repaying an existing mortgage, home improvements, providing an early inheritance, paying off debts, buying a new car or caravan or divorce settlements.

If you’re ready to take your first step to a lifetime mortgage, you just need to get in touch with us. As an independent mortgage broker, we have access to a wide range of lifetime mortgage products so we can best assess which is right for you and your situation. We also take care of the entire application process for you, making sure the right information and documentation is where it needs to be, and guiding you along every step of the way.

One thing we have learnt after many years in the industry is that one mortgage does not fit all. You, your home and your financial situation is entirely unique, and taking out a lifetime mortgage is a big financial commitment with long term impacts. Before making any decisions, we highly recommend you fully assess what you need the money for and when, and what other options may be available to you. If you’d like some personalised advice, you can get in touch with us to discuss your mortgage situation further and whether a lifetime mortgage, or another mortgage type, may be well suited to you and your home.s

As long as the lifetime mortgage you take is approved by the Equity Release Council, you will automatically benefit from a no negative equity guarantee. This means you will never owe more than the value of the property. As members of the Equity Release Council we will always work with you to make sure that you are never at risk of negative equity.

They can be zero! Most lifetime mortgage plans will not commit you to making any payment at all, but allow the flexibility to do so if you wish. It is worth keeping in mind that if you make no payments at all, the interest of your lifetime mortgage will continue to accrue and so reduce the remaining value of your estate.

Some benefits can be affected by releasing equity in your home. We recommend you speak with the Citizen’s Advice Bureau who can understand how much money you are taking, what for and when, and then explain to you the impacts this could have on the benefits you currently receive.

No matter what lifetime mortgage you take, the value of your estate left to your beneficiaries when you die will always be impacted. However, we will work with you assess your home and your situation to ensure that as much value is retained in your property as possible while taking out a lifetime mortgage.

No! The benefit of a lifetime mortgage is that you retain full ownership of your home, just as with a standard mortgage, and providing you stick to the terms and conditions of your mortgage product you will also not be at risk of repossession.

Depending on how much you need and the outstanding balance of your existing mortgage, you may be still be able to take out a lifetime mortgage. You may be able to take enough equity to clear your existing mortgage and give you the extra funds you require. If you’ve been making payments on an existing mortgage, this requirement can also be built into your new lifetime mortgage to help reduce the impact of accruing interest on the balance.

Many lifetime mortgages will allow you to add on the fees involved, or deduct them from how much you take. This means there’s nothing for you to pay upfront.

Yes! A very common concern of lifetime mortgages is that you are stuck in the same home you take the mortgage out against, but if you want to factor in moving house then we can help you to do this. For example, if you would prefer to live somewhere smaller should your spouse pass away we can help you find a plan that will allow you to move the lifetime mortgage to a new property.

The interest rates for lifetime mortgages are generally higher than for standard mortgages. However, many people are still surprised to see how low the rates are. Interest rates can also be affected by your age and how much you wish to borrow, so we can work with you to try and mitigate this cost where possible.