Whether you’re looking to help a family member with university fees, go on a once-in-a-lifetime holiday or renovate your home, equity release could be the solution you have been searching for.
ⓘ This is a lifetime commitment - check the benefits and drawbacks before you go ahead.
Equity release explained
Equity release works by unlocking some of the money tied up in the value of your home. These funds are tax-free and can be used in a variety of ways.
There are two types of equity release to consider: a lifetime mortgage or home reversion.
Lifetime mortgages
If you are a homeowner aged 55 or over with a minimum property value of £70,000, you could be eligible for a lifetime mortgage. This is a loan secured against your home. It will allow you to gain access to some of the funds that are tied up in the value of your property, yet you will still retain full ownership of 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. Our independent equity release advisers will be able to let you know whether this is the most suitable option for you.
Lifetime mortgage benefits
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You can unlock cash from your home, tax-free, to help meet your needs in later life
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You’ll always retain full ownership of your home and can stay in it for as long as you wish
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You can choose to make reduced or no monthly repayments to suit your circumstances
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You’ll never owe more than your home’s worth
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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
Lifetime mortgage drawbacks
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A lifetime mortgage is a loan secured against your home and subject to compound interest, meaning the amount you owe can grow quickly
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Equity release will reduce your financial options in the future
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Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits
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Equity release may leave you with limited or no property equity remaining
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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
Home reversion
If you’re 65 or over, you could opt to sell part or all of your property to a reversion company in return for a tax-free lump sum. You should be aware that the amount you will receive will depend on your age, property value and the proportion you sell. It’s also worth noting that you will receive less than the market value of your home.
With a home reversion, there is no interest to pay, nor any monthly repayments to make and you will be able to access your money in one lump sum. After your home has been sold at the end of the plan, the provider will then take their share of the proceeds, and the remainder will be left to your estate – if you did not sell the entirety of your property.
Home reversion benefits
- You can stay in your own home for the rest of your life, or until you move into permanent care
- There’s no interest to pay because the scheme is not a loan
- You’ll benefit from any increases in the value of your property on any unsold percentage
- You can protect a portion of your property for inheritance, providing you do not sell 100% of your home.
- Releasing equity from your home is tax-free
Home reversion drawbacks
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You will receive less than the market value when selling your property to the home reversion provider
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It is costly to cancel the plan early as you would need to buy back your property at the full market value
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You won't be the legal owner of the property
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A home reversion plan will reduce your financial options in the future.
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Dependent on the percentage of your property you sell, you may be left with limited or no property equity remaining.
Receive independent equity release advice with The Equity Release Experts
Remember, it is a regulatory requirement that you get equity release advice before you take out any equity release product. If you are searching for independent equity release advisers with a wealth of knowledge, you have come to the right place.
As we're completely independent, we have no ties to any provider. That means that we can make recommendations for you based solely on your needs.
Unless you decide to go ahead with a plan, our service is completely free of charge, as our fixed equity release advice fee of £1,799 is only payable on completion of a plan.
Here at The Equity Release Experts, we pride ourselves on giving you all the information you need in a completely transparent way. Our expert team can be reached via our contact form or on 0800 188 4812. Lines are open Monday-Friday, 9am-5.30pm.
Allow us to provide you with expert equity release advice during a no-obligation consultation. We offer a free equity release guide that you can download now, too.
