Equity release

Release some of the value in your home with The Equity Release Experts. We'll explain the benefits, drawbacks, and costs of equity release to help you make an informed decision.

What is equity release?

If you don’t want to move home, equity release is a way to access some of the tax-free funds locked in your property.

The equity in your home is the amount left over after settling any existing mortgage and any other debts secured against it.

As long as you meet the provider's eligibility criteria, you could use the money you release from your property for a variety of reasons, from a holiday to helping a younger family member go to university.

How does equity release work?

Equity release is available to UK homeowners aged 55 or over and with a property worth at least £70,000. There are four different ways to unlock some of your home's value, tax-free, through equity release:

Lifetime mortgage

For homeowners aged 55+ with a property worth £70,000+
A loan secured against your home
Release some of the tax-free funds from your home's value

Find out more

Payment-term lifetime mortgage

For homeowners aged 55-62 with a property worth £125,000+
You could unlock more than a comparable lifetime mortgage
Mandatory payments until oldest applicant turns 66

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Interest-payment lifetime mortgage

For homeowners aged 55+ with a property worth £99,000+
Reduced cost of borrowing with monthly interest payments
Receive an interest rate discount

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Home reversion

For homeowners aged 65+
Sell all or part of your home for a tax-free cash lump sum
There’s no interest to pay because the scheme is not a loan

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What can equity release be used for?

Equity release can help boost finances in later life as the tax-free funds you release can be spent in a variety of ways.

For some, it’s a matter of using the money to clear existing debts, though you should always think carefully before securing a loan against your home to repay existing debt. Others use it to help loved ones or to fund activities they’ve always wanted to do, such as go on the holiday of a lifetime. You could also use equity release for home improvements, such as a new kitchen.

Whatever you’re thinking of using the money for, it’s important to remember that any existing mortgage balance will need to be settled before the remaining funds come to you. The funds you release can be used to repay your existing mortgage, the remaining funds can be used for your needs and priorities.

Benefits and drawbacks of lifetime mortgages

Benefits

Tax-free cash: You can unlock cash from your home, tax-free, to help meet your needs in later life
Stay in your home: With a lifetime mortgage and payment-term lifetime mortgage you'll always own your own home and have the right to stay in your property for as long as you wish, however, with a payment-term lifetime mortgage you must ensure all mandatory payments are met

Reduced or no monthly repayments: You can make reduced or no monthly repayments with a lifetime mortgage. This is the same with a payment-term lifetime mortgage after its mandatory payment period ends, overpayments can be made, subject to lender's criteria

No negative equity guarantee: You’ll never owe more than your home's worth or pass on any equity release debt to your family, providing you keep to the terms of your plan
You can still move house: You have the right to move home in the future, subject to criteria

The interest can build up quickly: Lifetime mortgages and payment-term lifetime mortgages are loans secured against your home and are subject to compound interest, meaning the amount you owe can grow quickly
Mandatory payments: There’s a period of mandatory payments with a payment-term lifetime mortgage, and your home may be repossessed if you don't keep up with these payments

Reduced or no property equity: Equity release may leave you with limited or no property equity remaining and will reduce your financial options in the future
Effect on estate & means-tested benefits: Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits

Long-term financial product: These are long-term financial products and are not designed to be repaid early. If you do, early repayment charges may apply

Benefits and drawbacks of home reversions

Benefits

You can stay in your own home for the rest of your life, or until you move into permanent care
There’s no interest to pay because the scheme is not a loan

You’ll benefit from any increases in the value of your property on any unsold percentage
You can protect a portion of your property for inheritance, providing you do not sell 100% of your home.

Releasing equity from your home is tax-free

You will receive less than the market value when selling your property to the home reversion provider
It is costly to cancel the plan early as you would need to buy back your property at the full market value

You won't be the legal owner of the property
A home reversion plan will reduce your financial options in the future.

Dependent on the percentage of your property you sell, you may be left with limited or no property equity remaining.

How much equity could I release?

How much you could release depends on several things:

Your age
Your health and lifestyle
Your property’s value

By using our free, no-obligation equity release calculator, you can see how much you could release in under 60 seconds.

You can take out equity release if you still have an existing mortgage or any secured loans on the property. However, you must repay them, and the funds you release can be used to do this. Any money left over belongs to you.

Is equity release right for you?

If you're considering unlocking funds from your home, we recommend that you make sure equity release is right for you. Helping you understand equity release and finding out whether it is right for you is our primary role. Both you and your expert equity release adviser must be sure it is before going ahead.

We'll always tell you if equity release isn't right for you, and we offer a full range of later life options, so we can see if there is another product more suitable for your needs.

If you want you find out more about equity release, use our free calculator or download our free guide to find out more.

Talk to the equity release specialists

We specialise in offering reliable, honest equity release advice. If you want to find out whether it could be the right choice for you, get in touch today for a free, no-obligation consultation.

As a completely independent adviser, we have no ties to any provider, and we compare plans from across the market. Phone The Equity Release Experts on 0800 188 4812 or ask us to call you back.

Unless you decide to go ahead, our service is completely free of charge as our fixed advice fee of £1,799 is only payable on completion of a plan.

Your other options

It's important you're aware of some of your other later life finance options, which may include:

Retirement interest-only mortgage
Retirement repayment mortgage

Equity release costs

Knowing the costs associated with equity release and how to help manage them is important.

Compound interest explained
Lump sum vs drawdown lifetime mortgage
What does equity release cost?

Other options we don't offer

Downsizing
Unsecured lending
Using existing assets
Support from friends or family

Equity release FAQs

How much does releasing equity cost?

When you set up your plan, there will be some charges. These may include surveyors' and solicitors' fees. Unless you decide to go ahead with a plan, our service is completely free of charge, as our fixed equity release advice fee of £1,799 is only payable on completion of a plan. Your adviser will explain these in more detail before you decide to proceed.

How does compound interest work?

Unless you choose to do so, there are no repayments to make on a lifetime mortgage until the plan comes to an end. As a result, you pay interest not only on the loan itself, but also on the interest already added to the loan - this is known as compound interest.

With a lifetime mortgage the loan, plus compound interest, is typically repaid through the sale of the property when the last remaining applicant passes away or moves into long-term care. (Not applicable for home reversion plans).

More on compound interest

How could a drawdown lifetime mortgage reduce my cost of borrowing?

You could potentially save thousands over the course of your plan with a drawdown lifetime mortgage. This is because you only pay interest on the funds you release.

With a drawdown lifetime mortgage, you only take out the money when you need it. This can help reduce your total cost of borrowing, as interest is only charged on the money you release, rather than the full amount available. You could also reduce the cost of borrowing on a lifetime mortgage by:

Making repayments: You have the option to make ad-hoc or regular repayments, subject to criteria, to help reduce your total cost of borrowing. Even if you can only make small repayments, it will help reduce the amount of interest you pay over the lifetime of your loan.
Remortgage to another equity release plan in the future: If interest rates reduce in the future, you may have the option to remortgage your current plan to secure a lower rate. Getting a lower rate isn't guaranteed and you may need to consider early repayment charges if you choose to remortgage.

Future drawdowns are subject to the prevailing interest rate at the time and are not guaranteed.

More on lump sum vs drawdown lifetime mortgage

Can you pay off equity release early?

If you’re wondering “can you pay off equity release early?”, you can, however, with a lifetime mortgage, you’ll need to be mindful of early repayment charges. Your adviser will make you aware of any early repayment charges included in your plan.

To repay a home reversion you need to buy back the percentage of the property you originally sold to the provider, however, this will be at the full market price.