Equity release Southampton: are you eligible?

Update on equity release for Southampton homeowners

Written in line with our editorial policy.

Average property values in Southampton are well above the minimum for equity release eligibility. This opens up the availability of this form of lending to thousands of homeowners in Southampton aged 55+.

That will be good news if you are looking for a way to unlock tax-free cash from your home – without having to make monthly repayments on a loan. Thousands of people each year are turning to equity release as it provides an alternative route to traditional lending. 

How much you can release is linked to the value of your property, so it’s good news that Southampton property values have soared in recent decades. For example, the average home in the city is now worth over £74,000 more than it was ten years ago. 

This rise in property values has no doubt been partly responsible for the growing popularity of equity release in Southampton in recent times. Data from the Equity Release Council reveals that equity release sales rose by 13% in the South East between 2017-2022.

The figures indicate that Southampton homeowners have certainly been making the most of their booming property wealth to boost their day-to-day finances through equity release. 

If you are 55+ and would benefit from a cash boost to achieve your financial goals, you might be wondering if you could be eligible for a plan too. To find out, and to see how you might go about arranging equity release in Southampton, make sure you read this guide. 

We’ll be discussing:

• What is equity release?
• How much could I release?
• Why are house prices important with equity release?
• What are the main types of equity release in Southampton?
• Am I eligible for equity release in Southampton?
• What can you use the money you release for?
• What are the disadvantages of equity release?
• How can I arrange equity release in Southampton?
• Exploring alternatives to equity release

We hope this article will give you a good introduction into arranging equity release in Southampton. Nothing beats specialist advice though, so for further information and guidance, please do get in touch with our friendly selected equity release advisers.

Simply call us on 0800 096 2215 or request a call back and we’ll arrange a no-obligation appointment with an adviser for you. Or click here to find out how much you could unlock from your home with our free online tool.

What is equity release?

For thousands of homeowners across Southampton, equity release has enabled those in need of a cash boost to access their property wealth without having to remortgage or downsize. If you arrange a plan, the money you release could be used to clear your mortgage, loans or credit cards, update your home, book a holiday, help your family financially and much more.

A key benefit to equity release is that you don’t have to make any monthly payments after borrowing on your home. Instead, the interest can be left to roll up until you pass away or move into long-term care. At this point your home is usually put up for sale to repay your loan plus any interest. 

If you don’t want your loan to grow in size then there are also interest-only payment plans available. In addition, you have the option of making voluntary ad hoc payments each year, typically up to 10% of your overall loan amount, entirely penalty-free.

You can read about the different types of equity release plan available, and some examples of equity release and how it is helping UK homeowners to achieve their financial goals.

How much could I release?

How much you can release depends on several factors, including your property’s value, location and your age. But as a guide, according to the Equity Release Council, the average single lump sum amount released by lifetime mortgage customers was £100,978 in 2023. 

The above is just an average figure of course – customers have released far more and far less than that figure. You can use our free online equity release calculator to find out how much you could unlock from your home.

It is also important to remember that you don’t have to release the full amount that you might be eligible for. You can also access your money in smaller amounts over time if you wish.

You might also find that you can release more money, or achieve a lower interest rate, due to your health or lifestyle. This is because enhanced plans are available to people with poor health or those who have a history of smoking for example. 

Why are house prices important with equity release?

When you request an equity release quotation to see how much tax-free cash you could unlock, the amount will be largely based on the value of your home. Generally, the more your property is worth, the more cash is available to unlock. 

According to the most recent property data, homeowners in Southampton are likely to have much more equity in their properties now than when they bought them thanks to rising house prices. This is particularly the case for those who have owned their own home in the city for 5+ years.

Despite the property market slowing down in recent years, the average home in Southampton  has risen by £74,000 in the last decade alone. That’s an impressive 46% growth over ten years.

The table below demonstrates how the average home in Southampton  has risen in value since 2014, compared to the rest of the UK. 

SOURCE: Land Registry House Price Statistics in Southampton, Feb 2014 – Feb 2024.

Of course, values differ significantly depending on the type of house you have. Data from Zoopla shows that detached homes in Southampton have sold for an average of £412,487 in the last 12 months, whilst semi-detached homes are going for £307,453. The average terraced house sold for £266,031, whilst flats are achieving an average of £166,905.

It means that if you have little or no mortgage and own a property in Southampton, equity release could potentially help you unlock many thousands of pounds to boost your finances.

What are the main types of equity release in Southampton?

For those considering equity release, Southampton homeowners can choose between a lifetime mortgage or a home reversion plan. 

Lifetime mortgages

These are the most popular type of equity release plan as there are more options to choose from and you will continue to own 100% of your home. They are typically available to homeowners aged 55+. Some of the choices you have are:

• Interest-only lifetime mortgage. This allows you to make regular payments to pay off all or some of the interest to prevent or reduce interest from accruing on your loan.
• Drawdown lifetime mortgage. Instead of taking all of your available cash in one go, you can access an initial lump sum at the start, then ‘draw down’ further funds as and when you need to. This can save you potentially thousands of pounds over the life of your plan.
• Downsizing protection. Some providers allow you to downsize your home and settle your plan without penalty in the years after your spouse/partner passes away or moves into long-term care.
• Enhanced lifetime mortgage. If you have a qualifying medical condition or lifestyle factor then you could unlock more money from your home or achieve lower interest rates. 

Home reversion plan

Available to homeowners who are 60+, you may be able to release more money from your home with this type of plan. 

Instead of borrowing the money and accruing interest, you sell all or a percentage of your home to a reversion company in exchange for a tax-free cash lump sum or regular income. There is no interest to pay, but the home reversion company will pay you well below market value for the share they buy.

You then live in your home rent-free with the same rights as a tenant. When you pass away or move into long-term care then your home is sold and the reversion company can take their percentage.

Am I eligible for equity release in Southampton?

The first step to finding out how much you can release is checking your eligibility. To be considered for equity release, Southampton homeowners must meet these criteria:

• Your age – 55+ for lifetime mortgages and 60+ for home reversion.
• Your property’s value – typically at least £70,000 for lifetime mortgages and £100,000 for home reversion.
• Your property type – some properties are harder to get equity release on, such as houses of non-standard construction.
• Your property’s location – lenders may be unable to accept properties in certain locations that may adversely affect future saleability.
• Your outstanding mortgage – you should either have no mortgage outstanding, or an amount that can be paid off with some of the money you release.

Read more in our guide: Are you eligible for equity release?

What can you use the money you release for?

You can use the tax-free cash you release through equity release for just about any legal means. Here are some examples of the reasons that people choose equity release:

• Pay off your existing mortgage.
• Clear other debts.
• Home improvements.
• Enjoy super holidays.
• A new car.
• Make gifts to loved ones.
• Pay medical or home care bills.
• Supplement your regular income.

Read more in our guide: What can you use equity release money for?

What are the disadvantages of equity release?

Equity release may be attractive to you due to the potential for tax-free cash with no regular repayments, but there are potential downsides and risks to consider. 

For example, taking out an equity release plan will reduce the value of your estate and the amount of inheritance you can leave to your family. You should also remember that with a lifetime mortgage, the total loan amount can grow quickly as the interest rolls up on a compound basis. Releasing money might also affect your entitlement to some means-tested state benefits.

Read more in our guide: The pros and cons of equity release

How can I arrange equity release in Southampton?

For specialist guidance on equity release, Southampton homeowners can get in touch with our selected advisers by calling our friendly team.

We want you to have all the information you need to make the right decision for you, so all the advice and quotations you receive will be given free of charge. You’ll only pay a fee for advice if you choose to go ahead with a plan, though this can usually be paid from the money you release from your home.

Please call 0800 096 2215, or request a call back for a time that suits you. Alternatively, you can use our free equity release calculator to see how much you could unlock.

Remember, equity release will reduce the value of your estate and the amount of inheritance you leave. Think carefully before securing other debts against your home.

Alternatives to equity release in Southampton

You should always consider alternatives to equity release, and this is something our selected advisers will discuss with you if you choose to have an appointment with them. If there is a better alternative to equity release for you, they will always tell you. 

If you are considering equity release due to cost-of-living pressures or debt, you may also wish to contact some local Southampton organisations for advice and information. Here are some that may be able to help:

Citizens Advice Southampton

Website: https://citizensadvicesouthampton.org.uk/

Telephone: 0808 278 7863

Address: 4-15 Brunswick Place, Southampton, SO15 2AQ (by appointment only)

Wessex Community Bank

Website: https://wessexcb.org/

Telephone: 02392 827980

Address:  97 Fratton Road, Portsmouth, Hants PO1 5AG (by appointment only)

Sources:

Southampton house prices £74,000 more in 10 years: House price data for Southampton. Land Registry. Accessed 30 May 2024.

Equity release sales South East 13% increase, 2012-2022: Q4 2022 equity release statistics. Equity Release Council. Accessed 9 May 2024.

Average amount of equity released £100,978 in 2023. Q4 and FY 2023 equity release market statistics. Equity Release Council. Accessed 18 April 2024.

Average UK house prices, Feb 2014-2024: UK House Price Index. Land Registry. Accessed 30 April 2024.

Southampton house prices by property type: Sold house price data for Southampton. Zoopla. Accessed 13 June 2024.

See also:

London equity release

Leeds equity release

Manchester equity release

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn