What is equity release?

If you’re a homeowner aged 55+, you may be able to access tax-free cash without having to move

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Your guide to unlocking money from your home with equity release

There is a way you could unlock tax-free cash from the wealth you’ve built up in your home. Equity release has grown in popularity because it’s a way to access money without having to move. Thousands of people each year choose equity release when alternatives such as downsizing are less attractive or even impossible.

It’s also flexible, with options for taking the money you release as a single payment or as an initial lump sum followed by further withdrawals over time. You can use the money you release however you wish, once any outstanding mortgage or loan secured on your property has been cleared.

You can read our guide below to find out how to release equity from your home – with links to further pages covering every aspect of how equity release schemes work. Alternatively, find out what’s possible for you: get a free quote or talk to one of our friendly consultants by calling 0808 178 3055 or request a call back.

Did you know?

You will need to be a homeowner to qualify for releasing equity from your home, but you don’t need to have paid off all your mortgage. In fact, equity release is a way to potentially pay off your mortgage AND stay in your home for life.

What are the main types of equity release?

There are two main types of equity release schemes. If you’re looking for a way to get tax-free cash from the value in your home, equity release of either type could be the solution.

Lifetime mortgages

A lifetime mortgage is the most popular type of equity release for over 55s. This lets you access tax-free cash through a loan secured against your home, with no need to make regular repayments. The loan and interest are usually repaid through the sale of the property when you pass away or move into long-term care.

Any money left over after paying off the loan and interest will go to your beneficiaries. Some plans let you ring-fence part of the value of your property to ensure an inheritance for your loved ones.

You can take the money as a one-off lump sum, or in instalments from a drawdown facility. Other options include an interest only lifetime mortgage that lets you make payments to prevent the interest building up. You may also qualify for an enhanced lifetime mortgage that pays out more or offers a better rate if you are living with certain medical conditions or lifestyle factors.

Read more: Lifetime mortgages explained

Home reversion plans

A home reversion plan is a less common type of equity release where you sell all or a proportion of your home in exchange for tax-free cash. You can stay in your home for the rest of your life or until you move into long-term care.

It’s available to homeowners aged 60+ and lets you access cash in the form of a lump sum, regular income, or a combination of both. There is no rent, loan repayments or interest to pay.

If you sell just part of your home to the home reversion company, you can leave the share you keep to your beneficiaries. That way, they will be guaranteed an inheritance based on the future market value of their share of the property.

Read more: Home reversion explained

Elegibility document illustration

Who is eligible for equity release?

Each provider has their own criteria for equity release plans, but here’s a guide to typical criteria:

  • The minimum age for equity release is 55 or over for a lifetime mortgage, or 60 or over for a home reversion plan.
  • If you apply as a couple, eligibility will be based on the age of the youngest applicant on the deeds of the property.
  • You must own your own home in the UK, with a value of £70,000 or more for a lifetime mortgage (£100,000 for home reversion).

Read more: Am I eligible for equity release?

Check your eligibility

Call us on 0808 178 3055 and we’ll arrange a free, no-obligation appointment and equity release advice* from a specialist who will confirm whether you are eligible. If you’re unable to talk now, request a call back and we’ll call when it’s convenient for you.

Check my eligibility

How much equity can I release from my home?

How much money you can release depends on several factors. They include your age, the property’s location and its value. The maximum cash available for release typically ranges from 25% to 60% of the property’s value, and the older you are the more you can release.

As a guide to how much people are releasing on a property, equity release customers choosing a lifetime mortgage took an average of around £124,000 in 2021 according to the Equity Release Council’s market statistics.

To find out how much you could borrow, check here or talk to one of our friendly consultants by calling 0808 178 3055 or request a call back. They’ll answer your initial questions and connect you with specialist equity release advisers who can find you find the UK’s best equity release deals.

Read more: How much equity can I release?

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Already have a lifetime mortgage?
You could switch for a better deal

Now could be a good time to switch to a different lifetime mortgage. You may be able to release more tax-free cash due to being older than when you took out your existing plan. An increase in your property’s value or being in poorer health could also qualify you for further cash. Interest rate changes may also save thousands over the lifetime of your plan.

Why not arrange a free review* to find out if switching works for you?

Learn more

Can I sell my house if I have equity release?

Equity release plans will often provide you with the opportunity to sell your house and move if you wish. For example, most lifetime mortgages can be transferred to a new property, in the same way that regular mortgages are often portable. There are some restrictions, as equity release providers will want to ensure the new property will be saleable in the future.

If you downsize to a property worth less than your current home, you may need to pay back some of your equity release mortgage and this could incur an early repayment charge. Likewise, selling your current property and deciding not to transfer the lifetime mortgage to a new one would also likely involve early repayment charges.

Is equity release a good idea for you?

You may welcome the flexibility of equity release and the potential for tax-free cash, but there are potential risks to consider. It’s important to understand all of the costs, implications and potential disadvantages of equity release before going ahead.

All the advisers we work with can give you advice on the potential implications of equity release, and help you choose the best plan and provider for your circumstances. Please call us on 0808 178 3055 or request a call back and we’ll arrange a consultation with an adviser to provide you with the information you need in order to make an informed decision.

Read more about how to release equity from your home

The experts here at Equity Release Wise have put together extensive information to help you understand how equity release works and whether it’s right for you. Please click the links below to read more – or just pick up the phone and call 0808 178 3055 and our friendly equity release consultants will be happy to help.

Which companies have lifetime mortgage products?

A lifetime mortgage is a specialised form of lending, and not every lender offers it. Even so, there are plenty of lifetime mortgage providers to choose from and it could be time consuming and daunting for you to contact them all individually. This is where Equity Release Wise comes in: we can arrange a search across top equity release providers to help you find the best lifetime mortgage for your unique circumstances.

Here are just some of the leading lifetime mortgage providers the search will cover. All of them are of course authorised and regulated by the Financial Conduct Authority and are members of the Equity Release Council.

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Apply for your no-obligation equity release quote

Find out if you qualify for equity release and how much you could borrow. Just click ‘Get started’ or call us on 0808 178 3055 and one of our team will be delighted to help arrange a free consultation and quote*.

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1. Start your quote journey

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Fill out some simple details about your situation so we can start to prepare your quote.

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3. Compare your best deals

You’ll get personalised quotes tailored to your unique circumstances and goals.

Answering your questions

Still unsure of a few things? We’ve got you covered with answers to some of our most frequently asked questions.

  • How long does it take to release equity from a house?

      Completion of an equity release plan is typically 6–8 weeks after you submit your application with your adviser. Each application is different of course, and sometimes things do go ahead much sooner or take longer. For example, applications that are more complicated may take longer, due to factors such as property valuation issues or leaseholders being involved. 

      If it’s especially important that your application completes as soon as possible, please mention this to our selected advisers and they will do everything possible to help.

  • Can I pay off equity release early?

      For most people, an important reason for taking out a lifetime mortgage is that they won’t have to repay the loan until the home is sold when they pass away or move into long-term care. However, equity release providers recognise that people’s circumstances may change, and that you may choose or need to pay back the loan earlier.

      Early repayment charges will often apply, and these will be explained to you when you receive advice on lifetime mortgages. However, charges are often waived in certain circumstances and our selected advisers can explain the relevant terms and conditions of each lifetime mortgage product they present to you.

  • What are the initial costs of equity release?

      Just as with a normal residential mortgage, you should be aware of costs involved in setting up an equity release plan. Your adviser will make sure you understand these in full before you decide whether to take out a plan, but below is a summary.

      Your lender will typically charge valuation, arrangement and completion fees, with further fees payable to the solicitor who acts for you. Some of these fees can be paid from the money you borrow, so you may not have to worry about finding them from your existing savings.

      Our selected advisers naturally charge an advice fee – but remember that any initial advice or information you receive from them is completely free and without obligation. You only pay them a fee if you apply AND your case completes.

      Once a plan is taken out, there aren’t normally any fees. One exception is an early repayment charge that some lenders request if some or all of a lifetime mortgage is paid off before you pass away or move into long-term care.

  • What are the potential risks and disadvantages of equity release?

      As with any financial decision, there are of course pros and cons of equity release. Although it has helped thousands of people to access tax-free cash in or close to retirement, it’s important to fully understand the advantages and disadvantages of equity release before deciding if it’s right for you; Here are some potential risks you need to be aware of:

      • Lifetime mortgage rates are calculated daily and the interest is added to the amount you owe each month. The amount owed therefore increases and reduces any equity left in your home when the plan ends, unless you choose to make interest payments while the plan is running.
      • Taking equity out of your home will mean that the inheritance you leave to loved ones will reduce. Each time you take money from the plan, the level of possible inheritance will fall. 
      • If you give some of the money you release to family as a gift, they may be liable to pay inheritance tax in the future.
      • You may have to pay an early repayment charge if you choose to pay back some of the loan early.
      • Borrowing money and building up your savings through a lifetime mortgage may affect your entitlement to some means-tested state benefits. During your appointment with one of our selected equity release advisers, they will help you establish whether your benefits could be affected.

      Equity Release Wise can connect you with a highly trained and knowledgeable adviser who will take the time to explain everything to you, so you can be absolutely sure about your decision.

  • Can you use a reverse mortgage to purchase a home?

      A reverse mortgage is another name for a lifetime mortgage, which is the UK’s most popular type of equity release. There are very few restrictions on how you use the money you release. You will need to pay off any outstanding mortgage on your home, but apart from that you are free to use the money for almost any lawful means.

      Purchasing another home is a popular reason for equity release, such as in these circumstances:

      • You want to help loved ones. You can give money you release to loved ones for them to use as a deposit, or even buy a home outright if you can release enough. Please note however that this could mean that inheritance tax will be due if you die within seven years, so please take specialist advice.
      • Buy a second home. Some lenders include second home equity release plans in their product range.
      • Invest in a buy-to-let property. Some lenders will offer buy-to-let equity release plans so that you can release cash to fund an investment property.

      We should stress, however, that alternative ways to raise cash to buy a property may be more suitable or more cost-effective. Equity release involves compound interest rolling up on your loan, and you should carefully take this into account. Our selected equity release advisers will be happy to help you understand this and other potential risks of using a reverse mortgage to purchase a home.

  • What is the difference between equity release and a lifetime mortgage?

      Equity release and a lifetime mortgage are in essence the same thing. Think of ‘equity release’ as the overriding name for later life lending where the money is repaid through the sale of your home when you pass away or move into long-term care. 

      A ‘lifetime mortgage’ is the most popular form of equity release. An alternative is a home reversion scheme

      You’ll find extensive information about these here at EquityReleaseWise.co.uk, and of course our selected advisers will be pleased to provide further information and advice.

Still have questions?

We hope this information has been useful. To find out more 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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+ Client testimonials refer to the service provided by our selected equity release advisers. We have changed the clients’ names and certain identifying information to protect their privacy.

Please note that equity release will involve a home reversion or a lifetime mortgage, which is secured against your property and will reduce the value of your estate and impact funding long-term care. To fully understand the features and risks, ask for a personalised illustration. Equity release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long term care.

Important points to consider

Unlock tax-free cash from your home without having to sell or move.Reduces the value of your estate and the inheritance you leave.
The right to move in the future (subject to terms and conditions).Reduces the amount of property equity available to fund residential long-term care.
No mandatory monthly loan repayments or interest payments.Can limit your options for raising money through other means in the future.
Optional loan/interest payments to reduce the cost of the loan.Subject to compound interest and the amount owed will grow quickly.
You or your family will never owe more than your home is worth.Can impact your eligibility for means-tested benefits.

Please also see our guide to the pros and cons of equity release or guide to home reversion (the other, less common type), and ask for a personalised illustration to fully understand features and risks.