Is equity release the right option for you?

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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 their 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.

 This is a lifetime commitment - check the benefits and drawbacks before you go ahead.

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 so. The funds you release are tax-free and can be used in a wide variety of ways, from looking after the family to clearing your existing mortgage. 

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. 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. With a home reversion plan you won't have to move, but you will lose legal ownership of the property. 

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 or moves into long term care. In the case of a lifetime mortgage, the executor of your estate 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 by the reversion provider when the last remaining borrower passes away 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 your estate.

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 and the Equity Release Council (ERC) 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.

Can you move 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?

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.

Other options

Before going ahead, your equity release adviser will discuss your alternative options:

  • Home reversion, a type of equity release where you sell all or part of your home to a reversion company for less than market value

  • Retirement interest-only mortgage

  • Later life residential mortgage

  • Interest-payment lifetime mortgage

  • Downsizing

  • Unsecured lending

  • Using existing assets

  • Support from friends or 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.

Lifetime mortgage benefits

Your specialist equity release adviser will explain:

  • You can unlock cash from your home, tax-free, to help meet your needs in later life
  • You’ll always retain full ownership of your home and can stay in it for as long as you wish
  • You can choose to make reduced or no monthly repayments to suit your circumstances
  • You’ll never owe more than your home’s worth
  • You may be able to remortgage your plan in the future to release further funds or secure a better interest rate, although this isn’t guaranteed and may be subject to early repayment charges

Potential drawbacks

Your equity release adviser will also outline the following important things to think about:

  • A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
  • Equity release will reduce your financial options in the future
  • Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
  • Equity release may leave you with limited or no property equity remaining
  • A lifetime mortgage is a long-term financial product and is not designed to be fully repaid until the death or entry into long-term care of the last remaining borrower, otherwise early repayment charges may apply

Your other options

Before deciding on equity release, 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

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 £1,799 is only payable on completion of a plan.