What is Equity Release?
Equity release is way to take funds that are tied up in your property and use it for almost anything you please. Many people use it to fund spending in retirement, help family financially or repay debts.
The different types of equity release include a lump sum lifetime mortgage, drawdown lifetime mortgage, interest only lifetime mortgage , all secured against your home and a home reversion plan. With a lifetime mortgage, the most popular form of equity release, you maintain 100 per cent ownership of your home.
This growing financial solution enables you to release tax-free money from your home, and once you’ve paid off any existing mortgage that you may have, the money that you release is yours to spend as you wish. Plus you’re not required to make any monthly repayments if you don’t want to do so. The equity released from your property, plus accrued interest will be repaid upon death, or moving into long-term care.
There are different features and benefits that will be matched to your personal circumstances and plans for the future, for example, if you have plans to move in the future.
Taking equity from your home can be a daunting process as there are different types of equity release and different options to consider. Throughout the advice process, an adviser will talk through all the information you need and get to know you a little before giving key advice based on your circumstances, preferences and priorities.
The advisor will explain how equity release could affect the amount of inheritance you can leave and if your entitlement to means-tested benefits could be affected now or in the future. To understand the features and risks, ask for a personalised illustration
Frequently Asked Questions
Will I still own my own home after equity release?
Lifetime mortgages are the most popular form of equity release and with this type of equity release you will continue to own your own home. Depending on your circumstances your adviser may recommend a home reversion plan. This type of equity release plan works by selling some or all of your home to a home reversion provider.
What is the benefit of using a whole of market adviser?
Some advisers are ‘tied’ meaning that they only recommend plans that are offered by one lender. If your adviser is whole of market they can access the full range of products offered by various Equity Release providers. A whole of market adviser is able to compare rates and criteria across many lenders, increasing your chances of securing the most competitive rates available.
How much equity can I get from my home?
Typically between 25%-55% of your house value can be released. The amount depends on your age, type of property and your health and lifestyle. It is worth noting that the more equity taken from your property the higher the interest rate will be.
Are equity release rates fixed?
The majority of Equity Release plans come with a fixed rate of interest for the lifetime of the plan. During discussions with your adviser you may choose to opt for a variable rate.