Equity Release
Equity release allows homeowners aged 55 or over to unlock the value of their property without having to sell or move.
Equity Release
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Equity release allows homeowners aged 55 or over to unlock the value of their property without having to sell or move
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What is Equity Release?
Equity release enables you to access the cash tied up in your home while continuing to live in it. The funds can be taken as a lump sum, in smaller withdrawals, or a combination of both. The most common types of equity release are:
1. Lifetime Mortgages
You borrow money against your home, with interest typically rolled up (compounded) and repaid when the property is sold, usually upon death or moving into long-term care.
2. Home Reversion Plans
You sell a percentage of your home to a provider in exchange for a lump sum or regular payments, while retaining the right to live there rent-free.
Who is Equity Release For?
Equity Release might be right for you if:
- You're aged 55 or over.
- You own a property worth at least £70,000.
- You want to free up cash for retirement, major expenses, or family gifts.
- You plan to remain in your home for the foreseeable future.
Benefits of Equity Release
- Access Tax-Free Cash: Use the money for anything from holidays to helping children onto the property ladder.
- Stay in Your Home: Continue living in the property you love, with no need to downsize.
- Flexible Options: Choose between a lump sum, regular income, or a drawdown facility.
- No Negative Equity Guarantee: Most lifetime mortgages ensure you’ll never owe more than the value of your home.
Compare Your Equity Options
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Things to Consider
While equity release has many benefits, it’s not suitable for everyone. It’s important to weigh the potential downsides:
- Reduced Inheritance: Releasing equity reduces the value of your estate.
- Interest Costs: Compound interest can significantly increase the amount owed over time.
- Impact on Benefits: Accessing cash may affect means-tested benefits like Pension Credit or Council Tax Support.
- Fees: Setting up equity release involves costs such as valuation fees, legal fees, and adviser fees.
How does Equity Release Work?
1. Check Your Eligibility
Most providers require:
- A minimum age of 55 for lifetime mortgages (or 60 for home reversion plans).
- A property in the UK, typically worth at least £70,000.
- A mortgage-free home or a small remaining balance that can be repaid with the equity release.
2. Speak to a Qualified Adviser
Equity release is a complex financial decision. A qualified adviser can assess your needs, explain the options, and recommend the best plan. Click here for a free 45 minute session with a qualified & regulated equity release adviser.
3. Application and Valuation
Once you choose a plan, the provider will value your home to confirm its worth. This determines how much equity you can release.
4. Receive Your Funds
After legal and administrative processes are complete, you’ll receive your funds as agreed, whether it’s a lump sum or drawdown facility.
Cost of Equity Release
Typical costs to consider include:
- Interest Rates: Lifetime mortgages have interest rates ranging from 5–6%, though some providers may offer lower rates.
- Set-Up Fees: Including advice fees, property valuation, and legal costs (typically £1,000–£2,000).
- Early Repayment Charges: If you choose to repay earlier than agreed, charges may apply.
Alternatives to Equity Release
Before proceeding, consider whether equity release is the right option for you. Alternatives include:
- Downsizing: Selling your home and moving to a smaller property.
- Personal Loans: Borrowing smaller amounts, if affordable.
- Using Savings or Investments: Accessing other funds you may already have.
Hear from Clients of Trusted Advisors
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Get Started
Looking for alternatives?
If you’re not quite ready to speak to a financial adviser, we’ve got some greatcontent and tools to help you on your way.
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