Blog > How to release equity if you are under 55

How to release equity if you are under 55

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By Clare Yates • 19th April 2023 • 5 min read

Can you do equity release when you are under 55?

If you are a homeowner in need of a cash boost, you might be wondering “can I release equity if I’m under 55?”. Whilst you can’t use the product known as equity release until you’re 55, there are alternative ways to unlock some of your property wealth.

To help clarify your options, this guide covers the following information on releasing equity for under 55s:

  • What is an equity release plan?
  • Can I do equity release if I am under 55?
  • My spouse/partner is over 55, can we do equity release?
  • Why can’t you do equity release if you are under 55?
  • The difference between ‘releasing equity’ and ‘equity release’
  • How can I release my equity if I am under 55?
  • How can Equity Release Wise help me?

What is an equity release plan?

An equity release plan allows you to unlock some of the tax-free cash from your property to spend in any way you wish. There are two types of main equity release plan: lifetime mortgages and home reversion plans. Lifetime mortgages are more popular and most of the equity release plans taken out in the UK are of this type.

There are typically no monthly repayments to make with equity release as the loan plus interest is only repaid when you pass away or move into long-term care. At this point your home will be sold to settle the loan. Any money left over from the sale is left for your estate to distribute according to your will.

There are many different types of plans and features which enable you to tailor your plan. These include:

  • Enhanced lifetime mortgage: If you have a qualifying health condition then you may be able to unlock more cash or lower interest rates. 
  • Interest-only lifetime mortgage: These let you prevent or reduce interest from accruing on your loan by paying off some or all of the interest each month. 
  • Drawdown lifetime mortgage: Release some cash now, then access further funds in the future as and when you want to. This can save you a significant amount of interest over time.

Want to know how much you could unlock from your home? Check your eligibility and get your free quote now!

Can I do equity release if I’m under 55?

Unfortunately equity release plans are only available to homeowners aged 55 and over. If you jointly own your home then both applicants need to be 55+ to arrange a plan. 

If you are under 55 then you will not be able to apply for a plan until you reach the minimum age for equity release

If you are a homeowner researching “can you do equity release if under 55”, then you may wish to consider one of the alternative methods of releasing your equity, which we cover below.

My spouse/partner is over 55, can we do equity release?

The equity release age limit is slightly different for couples. If you share joint ownership of your house with your spouse or partner, the youngest person must meet the provider’s minimum age for equity release applications. So even if your partner is 65, for example, they must wait until you reach at least 55.

One option that would potentially enable the older partner to arrange an equity release plan is a ‘transfer of equity’. This is where the younger spouse or partner can be removed from the deeds of the property. There would then be just one person in ownership of the house who is over the minimum age for equity release, and they could apply for an equity release plan. 

However, you should think very carefully and seek legal advice before deciding to remove someone from the title deeds of your property for this purpose. Doing so could have serious implications. 

For instance, the removed partner could be left homeless should the homeowner pass away or move into long-term care. This is because the loan plus interest would have to be repaid following either of these events, typically within 12 months. Unless there are available funds elsewhere to settle the loan, the shared (but not jointly owned) home would have to be sold.

Why can’t you do equity release if you are under 55?

Homeowners must be over the minimum age for equity release – 55 years old – due to all equity release providers setting a minimum age requirement for their plans. 

Lifetime mortgages have a minimum age requirement of 55 and home reversion plans have a minimum age requirement of 60 years old. Some plans even have an equity release age limit of 65 years or older.

The difference between ‘releasing equity’ and ‘equity release’

Releasing some of your equity doesn’t necessarily involve arranging an equity release plan. Clear as mud? Here’s a quick jargon buster to explain.

Equity: The amount of capital or money you are left with after deducting any outstanding mortgage from the saleable value of your property. For example, if your home is valued at £250,000 and you have £70,000 left to pay on your mortgage, the equity in your home would be £180,000. If you do not have a mortgage, your equity/capital is the full value of your home.

Releasing equity: The process of accessing some of the cash tied up in the value of your home. There are many different ways to do this depending on your age, house value and outstanding mortgage amount.

Equity release plan: A financial product available to over-55s which enables homeowners to release some of your equity. You don’t have to sell, move house or make monthly repayments unless you choose to.

How can I release my equity if I am under 55?

If you are below the minimum age for equity release then you could still release some of your home’s equity in other ways. 

Downsize your home

A popular way for under-55s to release equity is by moving to a less expensive property. This could enable you to access some of your property wealth as cash without taking on additional debt.

Of course, many people can’t or do not wish to move from their current home. It might be that you already live in the smallest home suitable for you and your family. Or perhaps your home ideally suits your current and future needs, so you plan to stay there for the rest of your life. In this case, you may need a different solution for your financial needs.

Borrow more if you already have a mortgage

If you have a mortgage on your home then you may be able to increase the size of your loan to raise the money you need. You may of course need to demonstrate that you can afford to take on this extra borrowing. Some options include:

  • Apply for additional borrowing: You may be able to apply to increase your loan with your current lender. These applications are sometimes quite straightforward, with decisions often given in as little as a week. 
  • Remortgage: You may be able to move your outstanding mortgage debt to a different mortgage deal, either with your current lender or a new one. At the same time, you can apply to increase your mortgage loan to raise additional funds. Our selected advisers can help you search for and arrange a remortgage deal – please call us on 0808 178 3055 or request a free call back to discuss your options with an adviser. 
  • Arrange a second-charge mortgage: A second-charge mortgage means taking on an additional secured loan against your home. You might use this option to release some of your equity if you will incur penalties by remortgaging your current deal early. It does however mean that you will have two mortgages to pay each month and your second-charge mortgage lender will need proof that you can afford this.

Take out a home equity loan if you don’t have a mortgage

Also known as a homeowner loan, this is a loan secured against the value of your home. It can be a useful option for homeowners who do not have a current mortgage deal and so cannot remortgage. 

You will not have to sell or move from your home, but you will have to make monthly repayments towards the loan until it is repaid in full. Homeowners may choose this type of loan to consolidate other debts such as loans and credit cards, make home improvements or perhaps buy a car.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Find out more about releasing equity

If you have been researching “can I release equity if I’m under 55” or “what is the equity release age limit”, you may want to find out more about the options now available to you. For further help with equity release or remortgaging, please do call 0808 178 3055 or request a call back to talk to one of our selected advisers who specialise in later life finance.

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To find out more about equity release or arrange a consultation with an adviser, please call or request a call back and we’ll be happy to help further.

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