Are you eligible for equity release?

Checking your eligibility for equity release

Equity release is chosen by thousands of UK homeowners each year as a way to release some of the equity in their home without having to move. The cash you release is tax-free and you can spend it however you wish, once any mortgage or loans secured on the property are cleared.

If you are considering equity release and wish to understand whether you might be eligible, this guide will help. We look at factors that may or may not affect your eligibility, including your age, health, credit history, location and property type.

You may of course just prefer to talk to experts for information and advice. Just call the team at Equity Release Wise on 0808 178 3055 or request a call back for a time that suits you, and we’ll arrange an appointment. Alternatively, check your eligibility and get an initial indication of how much tax-free cash you could unlock.

What is the minimum age for equity release?

The standard minimum age for equity release with a lifetime mortgage (the most popular form of equity release) is 55. However, some providers set the minimum at 60 or higher. Providers may also set different minimum ages depending on the type of plan you take out.

The minimum age differs slightly for couples taking out equity release. Joint ownership of a property with a spouse or partner means that the youngest person must meet the provider’s minimum age criteria. There may be a way around this, and that’s to remove the person under the minimum age from the deeds of the property. This could have serious implications however, and both people on the deeds should take legal advice to assess whether this is right for them.

There is no standard maximum age for equity release, and each equity release provider has its own maximum age criteria for a lifetime mortgage. For example, with Legal & General equity release it’s 90 and with Just equity release it’s 85.

Another form of equity release is known as a home reversion plan – the minimum age for this type of plan is typically 60. With home reversion, you sell all or a proportion of your home in exchange for tax-free cash. You can then live in your home rent-free until you pass away or move into long-term care.

All of the information that follows on this page refers to lifetime mortgages as this is the most common form of equity release: please visit our home reversion page for more information about this alternative type of equity release.

What type of properties are eligible for equity release?

Houses and bungalows with a value of £70,000 or more generally fall within the acceptable criteria for equity release. Equity release providers tend not to have a strict maximum property value within their lending criteria. They may however give special consideration to properties worth more than a certain amount, such as £1million.

When it comes to other property types, there may be special minimum value criteria. As an example, equity release on ex council flats and houses is slightly different. Legal & General equity release for example requires former council properties to be worth at least £100,000 to qualify for a lifetime mortgage. They have the same criteria for former Ministry of Defence properties.

Many out-of-the-ordinary properties that used to affect eligibility for equity release are now more likely to be eligible. These include properties with a flat roof or with a mix of residential and commercial usage. Homes of a non-standard construction such as concrete, timber-frame and metal-frame are less likely to be eligible. But please do call us on 0808 178 3055 or request a call back as our selected advisers have extensive knowledge of the different plans on the market and may be able to help.

Can you get equity release on a leasehold property?

A question customers often ask our equity release consultants is: “Can you get equity release on a leasehold flat or other leasehold property?” The simple answer is ‘yes’, although certain criteria apply.

An important factor for equity release on a leasehold property is the length of the remaining lease:

• Some lenders have a simple rule for the length of remaining lease, such as requiring there to be at least 75 years remaining. 
• Other lenders look at your age too, e.g. the remaining lease plus the age of the youngest borrower must be at least 175 years. 

But there are options if your lease doesn’t currently meet a lender’s equity release criteria. It may be possible to negotiate an extension to the lease from the leaseholder. In some cases, you can even use some of the money from equity release to fund the extension. 

Leasehold equity release may be more complex than freehold, but we are here to help. Please call us on 0808 178 3055 or request a call back and we can arrange a no-obligation appointment with our selected advisers. They have up-to-date information about different lenders’ criteria for leasehold equity release and will let you know your options.

Can you get equity release on a retirement flat?

Plans are available that may allow you to release equity from your retirement flat. Also, it may be possible to release equity on a property you are living in now, with a view to moving into a retirement flat in the future.

Some lenders will consider applications for equity release on a retirement flat, but not all of them. To save you the hassle of a search across multiple lenders, we encourage you to get in touch. We can arrange a no-obligation search of plans from the top UK equity release providers.

Can I do equity release with an outstanding mortgage?

Yes you can in many cases, and equity release could be a suitable way to pay off your mortgage early. In fact, a condition of an equity release lifetime mortgage is that some of it will be used to clear any outstanding mortgage.

With the cost of living rising in recent years, many people are finding their finances are stretched. Clearing your repayment or interest-only mortgage could make a huge difference to your monthly budget – especially if you are still paying off a mortgage on a reduced retirement income. 

Choosing whether to take out equity release with an outstanding mortgage is a serious and sometimes complex decision. You should consider all the costs involved, including whether your existing mortgage lender will apply an early repayment charge. Our selected advisers can go through all of this with you to help you make the right decision for your unique circumstances.

Is my property’s location within the equity release criteria?

Most properties will be in locations that are eligible for equity release. Lifetime mortgage lenders will however want to know that properties are saleable, since a sale at the end of the plan is how the loan is repaid.

With that in mind, lenders may need to carefully consider lending against properties that could make resale difficult. Examples include properties next to a busy and noisy pub, or adjacent to an especially busy road or railway line. Different lenders have different criteria: our selected equity release advisers will do everything they can to find a lender who accepts your type of property.

Is equity release available in every part of the UK?

England, Wales, Scotland and Northern Ireland are all covered by UK providers, but some don’t cover all of the UK with products for equity release. Scotland is an interesting case where providers typically cover the mainland, but choice is more limited on the Scottish islands. If you need to discuss your eligibility for equity release in Scotland, please contact us and we will be happy to help.

When it comes to equity release, Northern Ireland customers will have access to a much smaller number of providers than in other parts of the UK. Choice is also limited in the Channel Islands, but there are providers covering these regions so please do contact us at Equity Release Wise and we will help you find a suitable provider. Unfortunately, equity release is not currently available for properties on the Isle of Man.

Does the condition of my property matter?

The condition of your property is important because it will affect the saleability and value of the property when it’s eventually sold to repay the loan. This is why lifetime mortgage lenders carry out a valuation and possibly a survey on the property when considering your application.

Sometimes, a lender will request that you carry out repairs as part of the lending contract. In some cases, they may let you use some of the money you release to complete these repairs. If your property requires repair work, our selected advisers can advise on which lenders are more likely to accept your application.

Can I access equity release on properties other than my main residence?

Most lifetime mortgage products are available only for a property that is your main residence. For example, you may need to live there for more than six months of the year for it to be eligible.

There are exceptions to the ‘main residence’ rule. The equity release market is becoming increasingly flexible and there are now plans that let you take out equity release on second homes and buy-to-let properties.

Does my health affect my application for equity release?

You do not have to answer any health or lifestyle questions when applying for a lifetime mortgage. However, it may actually benefit you to do so. That’s because living with certain health conditions or lifestyle factors could qualify you for a bigger cash release or a lower interest rate. Equity release lending on this basis is through an enhanced equity release.

What does NOT affect your eligibility for a lifetime mortgage?

Some factors that may harm your eligibility for other forms of finance will have no impact on your equity release application. For example, a lifetime mortgage is one of the few forms of lending where your income or credit score won’t matter. Even a current CCJ or IVA may have no impact on your eligibility.

That’s because you aren’t required to make loan or interest repayments. Instead, the loan is usually repaid through the sale of the property when you pass away or move into long-term care. An exception would be where you commit to making interest payments with an interest-only lifetime mortgage.