How does equity release work?

Equity release is available to homeowners aged 55 and over and those whose property is worth more than £70,000.

You don’t have to make any monthly repayments if you choose not to, and equity release plans have no set term. The plan is usually repaid when you, or the last remaining borrower, either passes away or goes into long-term residential care.

What can equity release be used for?

Equity release has become a popular way to 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 simple matter of using the money to clear existing debts or help loved ones. Others use it to fund activities they’ve always wanted to do and now have the time for, 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.

*You should always think carefully before securing a loan against your home.

Types of equity release

There are two types of equity release – lifetime mortgages and home reversions. Both come with different features, so it’s important to discuss with your adviser which one would be best suited to you and your situation.

Lifetime mortgages

Lifetime mortgages are the most popular method of releasing equity from your home. It is a loan secured against your property. Homeowners aged 55 and over could access some of the funds locked in the value of their house, while still retaining full ownership.

There’s usually a fixed rate of interest on these loans, though variable rates are available. Typically there are no monthly repayments to make as the loan plus roll up interest is repaid when the plan comes to an end.

Speak to The Equity Release Experts today for more information. They can recommend a plan to suit your circumstances. That could involve taking the money in one lump sum or in smaller amounts after an initial withdrawal, protecting your inheritance, or making ad hoc capital repayments to reduce the overall cost of your plan.

Home reversion

A home reversion plan is the other type of equity release. However, you need to be at least 65 to apply. A home reversion involves you selling part or all of your property to a reversion company in return for a tax-free lump sum. You will receive less than the market value of your home and the amount you will receive will depend on your age, property value and the proportion you sell. You can live in your home rent-free for as long as you choose. But you will no longer be the legal owner.

There are no monthly repayments to make and no interest to pay. When your home is sold at the end of the plan, the provider will take their share of the proceeds. Your estate will receive the rest, providing you did not sell 100% of your property.

With a home reversion plan, you’ll receive your money in one lump sum.

Speak to one of our expert equity release advisers to find out which type of plan suits you best.

How much does releasing equity cost?

When you set up your plan, there may be some initial charges. These may include surveyors' fees. Your initial consultation with The Equity Release Experts is completely free of charge. If you decide to go ahead with equity release, you will be charged an advice fee and have solicitors' fees to pay. Your adviser will explain these in more detail before you decide to proceed.

Can you pay off equity release early?

If you’re wondering “can you pay off equity release early”, there is a chance that you can. However, with lifetime mortgages you’ll need to be mindful of early repayment charges. Our advisers and your solicitor will be able to advise if this is something that’s included in your contract. To repay a home reversion you need to repay the provider the full market price of the percentage of the property that you released equity on, rather than the discounted amount you received.  

We are regulated by the Financial Conduct Authority

Equity release is regulated by the Financial Conduct Authority (FCA). This is the UK’s financial regulatory body whose aim is to ensure protection for consumers, enhance market integrity and promote effective competition.

In addition, the Equity Release Council (ERC), an industry body for the UK equity release sector, provides extra safeguards. Plans meeting their standards ensure:

• A no negative equity guarantee – you can never owe more than the value of your property

• The right to remain in your property for life until you or the last remaining applicant either passes away or moves into long term care

• The right to move home (subject to provider criteria)

All members of the ERC must adhere to the Council’s Statement of Principles, designed to promote high standards of conduct and practice.

What are the advantages and disadvantages?

Equity release plans are not one size fits all. Your qualified equity release adviser will help you to understand how you could release equity and whether it’s right for you and your circumstances.

Our independent equity release advisers can review your current situation to ensure you consider any potential alternatives. After researching the whole market, they’ll then give you a personalised recommendation. If equity release isn't right for you, they'll tell you.

Advantages of equity release

• You could use the funds to pay off any existing mortgage or debts, therefore reducing your monthly outgoings

• You don’t have to make any monthly payments if you don’t want to. However, with some plans you have this option (lifetime mortgages only)

• Typically there are no monthly repayments to make as the loan plus roll up interest is repaid when the plan comes to an end (lifetime mortgages only)

• You could release a one-off tax-free lump sum or, following an initial withdrawal, you can access further funds in stages (lifetime mortgages only)

• You can continue to live in your home for the rest of your life

• You’ll never owe more than the value of your home with a plan that meets the Equity Release Council standards

Disadvantages of equity release

• Equity release will reduce the value of your estate

• It could affect your entitlement to means-tested benefits now or in the future

• ​Equity release is designed to last for the rest of your life, so if you decide to pay it off early, you could incur an early repayment charge (lifetime mortgages only), home reversions can also be repaid early, however you would need to repay the percentage of the property released at market value

• With a home reversion you lose ownership of your property

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.

The results provided will show you the plans you may be eligible for from across the whole market, the amount you could release with different providers, their current interest rate and any benefits that come with the plan.

You can take out equity release if you still have an existing mortgage or any outstanding 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.

What happens next?

Releasing some of the funds from your home doesn’t have to be complicated. We’ve laid out all the steps for you so you can understand the process. Your equity release adviser will also keep you updated every step of the way.

Step 1: See how much equity you could release
Get a free, no obligation quote using our equity release calculator to see how much you could release from your home. It compares the whole market to find an equity release plan that could suit you.

Step 2: Advice and recommendation
You need to book an initial telephone consultation with your local, independent equity release adviser at a time that suits you. Following this, should you decide to proceed, your adviser will look at all the products available on the market and book a second consultation with you to provide you with a personalised product recommendation and suitability report based on your circumstances.

Step 3: Application
Once you’re satisfied the plan suits all your needs, your adviser will complete an application form and deal with all the supporting documentation needed. Your home will then undergo an independent, professional valuation at a time suitable to you. An offer based on this valuation will then be sent to you by the plan provider.

Step 4: Completion
Once you accept the offer, legal paperwork is coordinated by your solicitor and it could take approximately 8 to 12 weeks from application to completion. You’re then free to enjoy your tax-free cash.

Ready to take the next step or need more information? Call The Equity Release Experts to arrange a free, no-obligation initial appointment on 0800 188 4812 (lines open Monday-Friday 9am - 5.30pm). Alternatively, download our free equity release guide.

What our customers say

There’s a good reason we’re called The Equity Release Experts – but you don’t just have to take out word for it!

Our customers have rated us ‘Great’ on Trustpilot after helping them free up some of the funds locked in their homes. And we could do exactly the same for you too!

Is equity release 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.
 
An expert adviser can discuss your needs over the phone and explain more about equity release. They’ll always tell you if equity release isn’t right for you and there’s absolutely no obligation to go ahead. Unless you decide to go ahead, our service is completely free of charge as our fixed advice fee of £1,499 is only payable on completion of a plan.

Equity release may involve a lifetime mortgage that is a loan secured against your home. There are typically no monthly repayments as the loan plus roll up interest is repaid when the plan comes to an end. This is usually when you, or the last remaining applicant, either passes away or moves into long term care. You should always think carefully before securing a loan against your home. Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.

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