Equity Release

Equity release is a financial solution designed for homeowners aged 55 and above in the UK. It allows you to unlock the value tied up in your property without having to move. The amount released can be received as a lump sum or in smaller instalments, which can be used as you wish.

The two main types of equity release are lifetime mortgages and home reversion plans. Lifetime mortgages allow you to take out a loan secured on your home, while home reversion involves selling a portion or the entirety of your property.

Equity release can serve as a useful tool in retirement planning, providing a source of funds that can be used to supplement pension income, pay off existing debts or assist with day-to-day expenses. It allows you to utilise the assets you’ve accumulated over your lifetime without having to sell your home.

However, it’s crucial to consider the implications, such as potential reduction in your estate’s value and the impact on benefits eligibility. It is always a good idea to discuss your individual circumstances with a qualified adviser before proceeding.

Like all financial products, equity release comes with its share of risks. One common concern is the erosion of inheritance; as the amount you owe can increase over time, this could significantly reduce the value of your estate.

Another risk is negative equity, where the debt can exceed the value of your home.

However, many providers now offer a “no negative equity guarantee,” promising that you will never owe more than the value of your property.

The amount you can release through equity release depends on your age, the value of your property, and your health. Typically, the older you are and the higher the value of your property, the more money you can release.

There exist online calculators that can provide you with an estimate of how much you could release.

However, for a more precise calculation, it’s recommended to seek advice from an equity release specialist.

Yes, there are alternatives to equity release. Downsizing is one such option, where you could sell your existing property and move to a smaller, less expensive one, releasing money in the process.

Another option could be to use savings or other investments. Alternatively, you could consider taking in a lodger or rent out a room to generate additional income.

It’s essential to explore all options and seek advice before deciding.

Yes, equity release is regulated by the Financial Conduct Authority and guided by the Equity Release Council to ensure client safety.

Yes, you can still take out an equity release plan if you have an outstanding mortgage.

Equity release must repay any outstanding mortgage before additional funds can be used for any other objectives.

Yes, you will still own your house if you choose a lifetime mortgage.

However, with a home reversion scheme, you sell a portion (or all) of your property.

Releasing equity can affect your family because of the reduced inheritance when your property is sold.

Yes, you can still leave an inheritance with equity release.

There are plans that offer inheritance protection, allowing some property wealth to be set aside for your heirs.

Alternatively, you can leave an early inheritance for your heirs by gifting them with the funds you unlock.

Your entitlement to means-tested benefits can be affected by equity release.

This is something we recommend you discuss with your financial advisor.

No, you won’t lose your home.

Equity release allows you to remain in your property, rent-free until you pass away or move to long-term care.

Yes, you can change your equity release plan to find a more suitable deal for you.

Yes, you can move home with equity release if your provider approves.

Yes, you can pay back equity release early.

However, an early repayment charge may be applicable.

The charge differs per provider and can be up to 5% of the initial loan amount.

When you enter long-term care, your equity release plan will cease.

Your property will be sold and the proceeds will be used to settle the loan amount.

The ‘no negative equity guarantee’ ensures that neither you or your beneficiaries will be liable for any surplus debt.

You or your beneficiaries will receive any remaining proceeds from the sale once the loan has been settled.