What Is Equity Release?

Equity release is the term used for a range of products which allow you to release some of the value tied up in your property (your equity) if you are a homeowner over the age of 55. Read more about equity release eligibility.

There are a variety of providers that offer different equity release products, allowing you to release your cash in either a tax-free lump sum or in smaller drawdown amounts after the initial release.

How Does It Work?

The two primary types of equity release products are lifetime mortgages and home reversion products.

Lifetime Mortgages

A lifetime mortgage allows you to release equity in the form of a mortgage which is secured against your home. You do not lose ownership of your property and you do not have to move.

There are typically no monthly repayments as the loan, plus roll up interest, is repaid when the plan comes to an end. This will happen when you either pass away or move into long term care. However, you may have the option of paying any interest if you can afford to. Additionally, if you are worried about leaving an inheritance to your family or loved ones you can add an inheritance protection guarantee to your plan.

These allow you to specify a proportion of the future value of your property to be ring-fenced, ensuring your loved ones can inherit.

Click here to learn more about lifetime mortgages.

Home Reversion Plans

Home reversion plans differ from lifetime mortgages in that the equity you release is from selling part or all of your home to the scheme provider. You will not get the full market value for the property, however you will be granted a lifetime lease to remain there for as long as you wish.

A home reversion plan will not require you to move out of your home, and you will not have monthly repayments or rent to pay. Home reversion plans also do not accrue interest.

You can also ring-fence a proportion of your property’s future value for inheritance purposes. When the property is sold the proceeds are divided as per your individual plan, and your estate will benefit from any property price rises on any portion that you retained ownership of.

Learn more about home reversion plans.

Equity release reduces your estate’s value, and may affect your entitlement to means-tested benefits.

If you’re considering equity release, please read ‘is it right for you?‘ carefully.

The Process – What’s Involved?

Releasing cash from your home is a 5 step process:

Step 1: Calculation

Get a free no-obligation quote from our equity release calculator to see how much cash you could release from your home.

 

Step 2: Enquiry

When you enquire you will be offered a free home visit from an equity release adviser or, if you prefer, a telephone appointment. They will discuss your options and guide you through the process to see if it is right for you.

 

Step 3: Personalised Illustration

Based on your discussions and wishes, should you decide to proceed, your adviser will carry out thorough research and compile a personalised equity release recommendation for you.

 

Step 4: Application

Once you are satisfied that the plan suits all your needs by making an application, your home will then undergo an independent, professional valuation. An offer based on this valuation will then be given to you by the plan provider and will detail all aspects of your equity release plan.

 

Step 5: Completion

Once you accept the offer, legal paperwork is coordinated by your solicitor and it should take approximately 8 to 12 weeks to complete.

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