Is equity release the right option for you?

The idea of releasing some of the tax-free funds tied up in the value of your home can seem attractive. For some people, it can be a practical way to help 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 a popular way to do it. The funds you release are tax-free and can be used in a wide variety of ways, from looking after the family to taking that long-awaited trip of a lifetime. 

There are two main types of equity release:

Lifetime mortgage: For homeowners aged 55 and over, a lifetime mortgage is a loan secured against your home, this is the most popular type of equity release. 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 is usually repaid when the plan comes to an end.

Home reversion: To apply for a 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.

Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.

How does equity release work when you die?

The plan usually comes to an end when you (or the last remaining borrower) passes away. In the case of a lifetime mortgage, your beneficiaries will usually have 12 months to repay the plan – most often through the sale of the property. Once the lifetime mortgage and compounded interest is repaid any remaining proceeds will go to the estate.

With a home reversion plan, your home will be sold when you pass away. 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 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, property value, 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:

  • You can use the tax-free amount in a variety of ways

  • You don’t have to leave your home

  • It could give you financial peace of mind in later life

Equity release regulation

In the UK, equity release is regulated by the Financial Conduct Authority (FCA). The Equity Release Council (ERC) also has a code of conduct to provide extra protection.

As ERC members, we only recommend plans with a “no negative equity guarantee”. If the value of your home drops below the amount you owe, your beneficiaries won’t bear the cost when the plan comes to an end. This provides reassurance for your family that no equity release debt will be remaining when you pass away or move into long term care.

If you’re unsure if equity release is 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

No financial product is without its risk and equity release is no different.

For home reversions, you will no longer own your own home and won't receive market value for the percentage of your home you sell to the home reversion provider.

With lifetime mortgages, one of the main things to think about is the effect of compound interest and how this can increase your lifetime mortgage debt over time. With no monthly repayments to make, the debt will only grow with the interest added onto it. The interest added to the loan is then rolled up and compounded, and repaid when the plan comes to an end.

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

When you release equity, the value of your estate will reduce and you may lose your entitlement to means tested benefits. With a home reversion, you will no longer be the legal owner of your home.


Can you move house if you have an equity release plan?

As part of the ERC product standards, every customer has the right to move home but your new property must meet the lenders criteria at the time of looking to move. If the new property does not meet the lending criteria your equity release plan would need to be repaid.

Can you pay off equity release early?

An equity release plan is intended to be a lifetime commitment but that doesn’t mean it won’t be possible to pay it off early. If a lifetime mortgage is repaid early it could be subject to an early repayment charge. If a home reversion is repaid early you would need to buy back the percentage of the property sold at the full market price.

The alternatives to equity release

As you ask yourself “is equity release right for me”, you might like to compare it to alternative options 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. The alternatives include:

  • (Unsecured) personal loans
  • Retirement mortgages
  • Moving home
  • Using savings
  • Borrowing from family

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 will ensure you consider 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 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. 

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.


Things to consider with equity release

  • Equity release may involve a lifetime mortgage, a loan secured against your home.

  • With a lifetime mortgage there are typically no monthly repayments to make as the loan, plus roll up interest, is repaid when the plan comes to an end.

  • Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.

  • 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.