Is equity release for me?

The idea of releasing tax-free funds tied up in the value of your home can seem attractive. For some people, it can be a practical way to boost your finances in later life. 


But it’s not a one-size-fits-all solution and it’s a big decision too. By asking “is equity release right for me?”, however, you’ll get a much clearer idea of the options available to you.

It’s also a question that we can help answer at The Equity Release Experts. For more information or for a free initial consultation, call 0800 188 4812 or request a callback.

What is equity release and how does it work?

If you’re looking to unlock some of the money tied up in the value of your home, equity release is one way to do it. The funds you release are tax-free and can be used in a variety of ways – from looking after the family to taking that long-awaited trip of a lifetime.

There are two forms of equity release:

Lifetime mortgages: Available to homeowners aged 55 and over, a lifetime mortgage is a loan secured against your home. You won’t have to move, and you’ll still own your home. In most cases, the rate of interest is fixed and there’s nothing to pay each month – unless you choose to, as the loan plus roll up interest will be repaid when the plan comes to an end.

Home reversion: To apply for home reversion, you must be at least 65-years-old. Here, the homeowner sells part (or all) of their property to a reversion company in return for a lump sum. But you won’t get the full market value – and what you do get can depend on different factors. With a home reversion plan you won't have to move, but you will lose legal ownership of the property.

How does equity release work when you die?

The plan is repaid when you (or the last remaining borrower) passes away or moves into long term care. In the case of a lifetime mortgage, you or your executors will usually have 12 months to repay the plan – most often through the sale of the property.

With a home reversion plan, your home will be sold by the reversion provider when the last remaining borrower dies or moves into long term care. The provider will first take their share of the proceeds. If only part of the home was sold in the first instance, the rest will go to you or your beneficiaries.

Making sure you choose the right option

Equity release could be the right option for you – but it doesn’t mean that it is. It can depend on several factors: your age, income, future plans and the amount you hope to release. It’s not all about the short-term either. Equity release must always be seen as a long-term commitment.

There are potential benefits to equity release, however:

  • You can use the tax-free amount in a variety of ways
  • You don’t have to leave your home
  • It can give you financial peace of mind in later life

Is equity release safe?

In the UK, equity release is regulated by the Financial Conduct Authority (FCA) for your peace of mind. The Equity Release Council (ERC) also has a statement of principles to provide extra protection.

As ERC members, we recommend plans with a “no negative equity guarantee”, this means you will never owe more than the value of your home.

If you’re unsure if equity release is safe or right for you, get expert guidance from advisers you can trust. Talk to The Equity Release Experts for free on 0800 188 4812 or request a callback.


The potential drawbacks of equity release

One of the main things to think about with equity release is the effect of compound interest and how this can increase your debt over time. If you choose to make no monthly repayments, the debt will only grow with the interest rolled up each year and added to the loan.

You can find out more about this in our guide to how much equity release costs.


Can you sell your house if you have an equity release plan?

As part of the ERC statement of principles, every customer has the right to move home – this allows you to transfer your lifetime mortgage to a new property, providing it meets their lender's criteria. 


Can you pay off equity release early?

A lifetime mortgage is intended to be a lifetime commitment and is not designed to be repaid early, doing so may incur early repayment charges. If you choose to end your Home Reversion Plan you would need to buy back the portion of the house you sold which is likely to be at a higher amount than you received for it.


The alternatives to equity release

As you ask yourself “is equity release right for me?”, you might like to compare it to alternative options, such as downsizing, to see which best meets your needs. Ultimately, it always comes down to your current situation – and the position you want to get to in the future. We will ensure that you consider the alternatives.

Here at The Equity Release Experts, we only ever make a recommendation if we’re fully certain that it’s right for you. By talking to us for free, we ensure you consider all of your options.

Contact us with no obligation on 0800 188 4812 or request a callback.


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 equity release adviser, we have no ties to any provider. So, that means we’re free to make recommendations that are in tune with your needs and ambitions.

Phone The Equity Release Experts on 0800 188 4812 or ask us to call you back. We’re here Monday-Friday, 9am-5.30pm.

We also offer a free equity release guide that you can download first.

We understand equity release isn’t for everyone, and we’ll never say it’s the right option for you unless we’re certain.


Things to consider with equity release:

  • A lifetime mortgage is a loan secured against your property. The loan plus roll-up interest is repaid when your plan comes to an end. Usually, that’s when you, or the last-remaining applicant, either passes away or moves into long-term care.
  • With a lifetime mortgage, the most popular form of equity release, you’ll still retain full ownership of your home and there are typically no monthly repayments. You should always think carefully before securing a loan against your home. 
  • Equity release will reduce the value of your estate and may affect any means-tested benefits that you're eligible for.
  • 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.