Equity release in Northern Ireland: how it works, what it costs and the alternatives

Many homeowners in Northern Ireland reach retirement with most of their wealth tied up in the house. Equity release lets you unlock some of that value without moving out. It can be the right answer for some people and the wrong one for others, so this guide sets out how it works, what it costs and what else to consider first.

What is equity release?

Equity release lets homeowners aged 55 or over take money out of their home while carrying on living in it. There are two types:

• A lifetime mortgage. You borrow against your home and stay the owner. Nothing usually has to be repaid until the last borrower dies or moves into long-term care. This is by far the most common type.
• A home reversion plan. You sell all or part of your home to a provider for less than its market value, and keep the right to live there.

Is equity release available in Northern Ireland?

Yes, but the choice is narrower than in the rest of the UK. Only a small number of lenders offer lifetime mortgages on Northern Ireland homes, and home reversion plans are generally not available here.

The basic rules are the same as anywhere else in the UK:

• you (and anyone borrowing with you) must be 55 or over
• the property must be your main home and meet the lender’s minimum value
• any existing mortgage must be paid off, usually from the money you release

Because there are fewer options, it matters to use an adviser who knows which lenders lend here and how their plans differ.

How a lifetime mortgage works

You can usually take the money as one lump sum, or agree a total and draw it down as you need it. Drawing it down can cost less, because interest is only charged on the money you have taken.

With most plans you make no monthly payments. Instead the interest is added to the loan each year, and next year’s interest is charged on that bigger balance. This is called compound interest, and it means the amount owed can grow quickly over 15 or 20 years.

Many plans let you pay some or all of the interest if you want to, which keeps the debt down. When the last borrower dies or moves into long-term care, the home is usually sold and the loan repaid from the sale.

How much could you release?

It depends mainly on:

• your age (the older you are, the more you can usually release)
• the value of your home
• your health, as some lenders offer more if you have certain medical conditions

We’ll give you a personalised illustration showing how much you could release and what you could owe over time before you decide anything.

The safeguards

Plans from members of the Equity Release Council must meet its product standards:

• Fixed or capped interest for the life of the loan.
• The right to stay in your home for life, or until you need long-term care.
• The right to move home, if the new property is acceptable to the lender.
• A no negative equity guarantee. When the home is sold, you or your estate will never owe more than it sells for.
• The right to make penalty-free repayments, within the lender’s limits.
• No early repayment charge if you move into long-term care, whether that is a care home or a relative’s home, with a doctor’s certificate.

You must also take independent legal advice from a solicitor before the plan goes ahead.

The downsides to think about

• It costs more than you might expect. Interest builds up on interest, so the debt can grow quickly if nothing is repaid.
• It reduces what you leave behind. The more you release, the less there is for your family.
• It can affect benefits. The money could reduce means-tested benefits, such as Pension Credit or help with your rates.
• Paying it off early can be expensive. Most plans have early repayment charges for years after you take them out.
• It is a long-term decision. It can affect your options later, for example if you want to move.

Alternatives to consider first

A good adviser should talk you through the alternatives as well as equity release itself:

• A retirement interest-only mortgage. You pay the interest each month, so the debt doesn’t grow. More lenders offer these in Northern Ireland.
• A standard remortgage or further borrowing, if your income allows. See our remortgage advice.
• Downsizing to a smaller home.
• Savings, pensions or family help.
• Checking your benefits. Some people are entitled to help they aren’t claiming.

Why people in Northern Ireland use equity release

• clearing an interest-only mortgage that is coming to an end
• home improvements, or adapting a home to stay in it for longer
• helping children or grandchildren onto the property ladder
• topping up retirement income
• paying for care at home

Talk to your family

Equity release affects what you leave behind, so we recommend involving your family in the conversation if you can. They are welcome to join the meeting. The decision is still yours, and we’ll make sure you have everything you need to make it.

How it works with McDowell

1. Book a free initial chat. Tell us what you need the money for and your situation.
2. We look at the alternatives, as well as equity release.
3. We compare the plans available on Northern Ireland homes and recommend the one that fits.
4. You get a personalised illustration showing how much you could release and what you could owe over time.
5. Valuation and offer. The lender values your home and makes an offer.
6. Independent legal advice. Your solicitor explains the plan and its effects before you sign.
7. The money is released, as a lump sum or drawdown facility.

Frequently asked questions

How old do I need to be for equity release?

You need to be at least 55 for a lifetime mortgage. If you are borrowing jointly, both of you usually need to be 55 or over.

Will I still own my home?

Yes, with a lifetime mortgage you stay the owner. The loan is secured against your home and repaid when it is sold.

Can I leave my home to my family?

Yes, but the loan and interest are repaid first, usually from the sale of the house. Your family can also repay the loan from other money if they want to keep the home.

Can I still have a mortgage on my home?

Yes. Any existing mortgage has to be paid off, and this is usually done with part of the money you release.

Do I have to make monthly payments?

Not usually. Many plans let you choose to pay some interest, which stops the debt growing as fast.

Is equity release more limited in Northern Ireland?

Yes. Fewer lenders offer plans here than in the rest of the UK, and home reversion plans are generally not available. We’ll show you what is on offer for your home.

Talk it through with McDowell

Northern Ireland based, with over 30 years’ experience, we help homeowners right across Northern Ireland. Find out more on our equity release page, or book a free call below.

This article is general information, not personal advice.

Equity release may involve a lifetime mortgage or a home reversion plan secured against your home. It will reduce the value of your estate and may affect your entitlement to means-tested benefits. To understand the features and risks, ask for a personalised illustration.

This article is general information only and isn't personal advice. Mortgage and protection products depend on your circumstances, so please speak to one of our advisers before making a decision.