What you need to know about equity release
Let’s start by understanding the key facts about equity release so you can make an informed decision on whether this is the right thing to do with your home.
Remortgaging your home may be something you consider for several reasons. Perhaps your current deal is about to end or you would like a better rate. Perhaps your home’s value has gone up considerably and you’d like to take advantage of that.
Once you decide a remortgage is right for you, the process can take as little as 1-2 months, but it’s important to get a broker who will minimise fees (or qualify you for removing them completely) and act in a timely manner in order to maximise your benefits.
What is Equity Release?
Give us a call or click the button and our mortgage experts can help give you the guidance you require. With years of equity release experience, we will be delighted to help.
There can be. You will find that the amount of inheritance to be left to family are reduced, or any benefits that you are in receipt of, are reduced or even removed altogether. Speak to our team to find out more about how equity release could affect your circumstances.
Equity release can be particularly beneficial if a home improvement is needed, or you may have encountered a financial issue that isn’t rectified with the cash you have at your immediate disposal. It is also often chosen as a way to help other family members get their foot onto the property ladder, or to treat yourself to something that was perhaps unobtainable previously.
Yes, there are two common forms of equity release: home reversion plan and lifetime mortgage. Each offer differences that may be more beneficial to some people than others.
Homeowners aged over 55 are eligible for an equity release loan, but various factors are taken into account, such as the property type, its value and whether the home is a permanent residence.
It’s a form of mortgage that enables homeowners aged over 55 to access the equity tied up in their property whilst still being able to live in it. The equity is paid out in a tax-free cash sum that takes the form of a mortgage, paid back through the home sale when the homeowner either passes away or goes into long-term care. Payments can be made monthly if preferred, or once the property is sold.
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We know it gets confusing!
That is exactly why we’re here to explain your options and how to make it work for you!
....so, in a nutshell...
The Benefits of Equity Release
Equity release can be particularly beneficial to homeowners who may need a little financial assistance, want to treat themselves or assist their family members with money to help them achieve a particular goal.
You still keep your home
When you release equity in your home, you still get to live in it. The property remains yours until you either pass away or are placed into care. Without the fear of being asked to move out, you can remain in your home for as long as you wish, and should you be living as a couple, when one of you passes away, the other can remain living in the home until they pass away or go into care.
More money for retirement
Being paid a lump sum may help you through retirement and make things that were previously unaffordable much more accessible. With a higher income through retirement, you could enjoy life with a little less stress. You could even use it to pay off the remainder of the mortgage.
No negative equity gurantee
We ensure that you will never accrue a debt that can be passed onto your family. As we are voluntarily members of The Equity Release Council the lifetime mortgages we obtain ensure you will never owe more than your property’s value. This means that upon its sale, the value of the equity release loan is covered, and your family is not pushed into debt.
What’s more, in those cases where the property value has gone down and the money raised from the sale does not cover the loan, any outstanding balance is written off.
You could still move to a new home
If you have taken equity release but realised downsizing or relocating might be a worthwhile option, many equity release plans allow for this to happen. Simply find out what the specific criteria of your lender are. However, be aware that not all equity release providers can offer this.
Our role is to help you make an informed decision
There are many aspects to all types of mortgage and we understand that you need to make the best decision.
You will undoubtedly have many more questions, so please feel comfortable enough to arrange a free, no-obligation chat!
Frequently Asked Questions
There is a lot to consider when looking at equity release. Our team will always do their best to give you as much information as possible.
Have a look at our FAQs for answers to the most common equity release questions.
Here are a few of the questions we regularly answer for those who are wondering if this is the correct choice.
Yes. A valuation will be carried out by a qualified surveyor on your property so you and the lender can obtain an accurate value of your property.
A Home reversion Plan is where you sell a portion, or the entire property, to a home reversion provider. You either receive a lump sum or monthly payments, enabling you to remain in the property rent-free. You can remain in the home until you decide to sell, at which time the profits are divided among you and the home reversion provider. The more percentage sold to the provider, the less you receive upon the sale. You can increase the percentage sold to the home reversion provider over time too if you wish.
You can make monthly payments if you wish, but you certainly don’t have to. In most cases, the loan is paid back upon the sale of the property, when you either pass away or are placed into long-term care.
Please be aware that interest accrues monthly on the amount loaned. If you decide to move home the mortgage will be repaid and you may have an Early Repayment Charge. Best to speak with your lender or adviser to find out before selling your home.
It is up to you – you can either take one lump sum, receive monthly instalments or have a drawdown facility (which is like an overdraft) where you can take or “drawdown” more money form your property as and when you need it. Drawdown is a way of you taking money when you need it and you will only pay interest on the money you take making the interest accrue slower on your balance.
Perhaps the most common form of equity release, a lifetime mortgage is where a lump sum is paid out that gains interest. It will not get paid back until the property is sold, the homeowner is moved into care or they pass away. Upon the sale of the home, the loan is paid back with any remaining funds distributed among the estate or to you if you are moving.
There are two types of equity release: lifetime mortgages and home reversion plans. Each offers slightly different benefits to the other.
No. You must own your home yes, but to be offered equity release, you do not have to own the property outright. If you currently have a mortgage on your property the equity release provider will insist you repay your mortgage with the equity release loan. Any money left over will be passed to you.
If you are looking to get a mortgage whether its residential or Buy To Let, all lenders have different criteria and age lending limits so we can help with this so why not get in touch and find out.
The lender will require you to have your home valued during your remortgage application.
This normally comes free of charge. You will, however, need to know roughly what the market value is before you start your remortgage.
The Loan to Value (LTV) dictates the interest rate you pay, the lower the LTV the lower the interest rate. Loan to Value is calculated as the loan as a percentage of the property value so a property value of £100,000 with a mortgage of £90,000 means the Loan to Value is 90%
If you have had bad credit in the past, then there are several lenders out there who would potentially consider you for a remortgage, but it depends on what bad credit you have had, i.e. defaults, IVAs, CCJs or bankruptcies.
With these mortgages, you will need to speak with a mortgage adviser to arrange this for you as most of these lenders do not deal with the public directly. For more information on bad credit mortgages Get in Touch with one of our experts who would will be happy to help.
Yes. You can.
You can remortgage while you are currently in a fixed rate mortgage.
If you do you may be subject to Early Repayment Charges from your current mortgage lender which can be tens of thousands of pounds so please ensure you check these with your current lender before remortgaging.
Remortgage rates are not normally higher than home mover or purchaser rates. Theya re comparable. Some lenders even offer a free valuation and free legal costs to entice you to remortgage to them. This is not always the case with every rate the lenders have so please check before you apply.
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