What is equity release?

Want to know more about releasing equity from your home? You can find out whether equity release is the right option for you.

What is equity release and how does it work?

Equity release is a way for homeowners aged 55 and over to access some of the tax-free funds from their home, without having to move. It’s a way for those either in, or approaching, retirement to help boost their finances. This could be to renovate their house, head off on a once in a lifetime holiday or even to help loved ones with school and university fees.

You could release these tax-free funds from your home in one of these three ways.

  • Lump sum lifetime mortgage: This is a loan secured against your home, giving you access to a one-off pot of money while still owning your property.

  • Drawdown lifetime mortgage: The same as a lump sum lifetime mortgage but instead of taking just one lump sum, you agree an overall sum of money and after an inital release your funds are released in stages as and when you need them, and you only pay interest on the money you’ve released.

  • Home reversion: This involves you selling part or all of your property to a provider, in exchange for a lump sum of tax-free money. You’ll live in your home rent-free but will no longer be the legal owner.


Who is eligible for equity release?

To qualify for equity release, you must meet a lender’s eligibility criteria. These are usually:

  • You’re aged 55 or over

  • You’re a homeowner and own property in the UK

  • Your property is worth a minimum of £70,000

  • You release a minimum amount of £10,000, subject to criteria

To give you a better understanding of each factor, let’s look at them in more detail.

Your age

It’s important to remember that it’s the youngest homeowner that must be aged 55 or over to qualify. The age of the youngest applicant is always the basis of the equity release enquiry. 

Your home’s location

Another factor will be the location of your home, as it must be located in the UK for you to qualify for equity release. There are only a handful of lenders who will consider you if your property is in Northern Ireland. Check with your equity release adviser to understand if the location of your home would be acceptable.

The value of your home

The minimum property value any lender will accept is £70,000. Some lenders do also have a maximum value to protect themselves from risk. The condition of your home is also something providers will take into consideration. It will need to be in a good condition and maintained to a high standard. 

How much money you could borrow

The maximum amount of money you can borrow is based on the youngest homeowner, their health & lifestyle choices and the property value. The older you or your partner are, the more money you could borrow. Our advisers will recommend an initial loan amount that meets your needs. The standard minimum release amount is £10,000, but £2,500 for income products.

Want to know how much equity you could release? Use our free equity release calculator.

Remember, you’ll need to pay off your existing mortgage before you can proceed with equity release. If you need to do this, you can use the funds you release to pay off your existing mortgage, and the rest of the money will then come to you. 

How long does equity release take?

Depending on the type of equity release plan you have chosen, it typically takes between 10 and 12 weeks to receive the funds into your bank account*. If there are any complications along the way, it could take longer. However, your adviser will be on hand to talk you through the whole process.

* Timescales cannot be guaranteed however this is a typical time frame.

Can you pay off equity release early?

Equity release isn't designed to be repaid early, however you can repay equity release early if you want to. Dependant upon the lender, the type of plan and when it started, early repayment charges may apply, so check with your lender before making a payment. If you plan on making early repayments we would not recommend equity release as a short term lending option. 

Some plans offer fixed early repayment charges, so you know your early repayment charge from the outset. Other plans offer gilt based early repayment charges meaning your early repayment charge will vary throughout the lifetime of your plan. This is because plans are usually repaid when you or the last remaining borrower either passes away or moves into long term residential care. It’s important to discuss these options with your adviser when setting up your equity release plan.

Want to know more about equity release?

Our friendly and experienced team can be reached on 0800 188 4812 or via our quick contact form if you need any additional information.


Things to consider with equity release

  • Equity release may involve a lifetime mortgage which is 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.

  • With a home reversion plan you will sell all or part of your home to a reversion company for lower than market value.

  • 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.