Lifetime equity release mortgage
Your essential guide to equity release
Equity release explained
Equity release is a form of retirement lending that enables homeowners over the age of 55 to borrow the equity they have built up in their home by paying off their mortgage. It can be released as a tax-free lump sum, in smaller drawdowns or a combination of both. There are two main types, lifetime mortgages and home reversion plans.
A lifetime mortgage enables you to borrow the equity in your home by taking out a loan which is secured against your home. You will still own your property and both the debt and interest you accrue on the loan, are usually repaid when you die or move into long-term care through the sale of the property.
Home reversion plans
A home reversion plan works by selling all or part of your property below the market value, in return for a lump sum of cash, regular installments or both. You will need to be over 65 years old and can continue to live in your home as a co-owner.
- How does equity release work?
In order to be eligible for an equity release mortgage, you will firstly need to be over 55 (or 65 for home reversion) and own your own home. Some providers will also require your property to have a market value of at least £75,000. But the criteria lenders typically use to assess the amount you will be able to borrow is based on your age, health, and property.
Is equity release safe?
All equity release schemes are regulated by the Financial Conduct Authority (FCA) and governed by the Equity Release Council (ERC). You can remain in your home and if you or your partner dies or goes into a care home, the remaining partner can continue to live in the property. If you decide to take out a lifetime mortgage, you will also continue to own your property, including any increase in its value.
Do you pay tax?
The money you receive is completely tax free. But what you choose to do with your money may be taxable, such as putting your money into a savings account instead of spending it.
Is equity release a good idea?
It can be a good option for many homeowners over 55 years old to borrow money. It can be used to fund a more comfortable retirement, clear any outstanding debts or financially support your loved ones. Like any financial decision, you should seek professional advice in the first instance, which is where we can help.
An equity release product will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits. To understand the features and risks please ask for a personalised illustration. We charge a fixed fee of £995 which is payable on completion.