Equity release
If you're 55 or over, equity release can let you take money from your home without moving. It's a big decision, so we take our time over it.
A big decision deserves careful advice
Equity release lets homeowners aged 55 and over take money from their home while continuing to live in it. The money can be taken as a single lump sum or in smaller amounts over time. People use it for things like home improvements, helping family, clearing an existing mortgage or adding to retirement income.
It's a long-term decision. Equity release reduces what you leave behind and can affect means-tested benefits, so we explain the alternatives as carefully as the plans themselves, and we encourage you to involve your family in the conversation.
The two main types
A lifetime mortgage is the most common type. It's a loan secured on your home, and you keep ownership. Usually no monthly repayments are required: interest is added to the loan, and the total is repaid when the home is sold after you die or move into long-term care. Some plans let you pay some or all of the interest if you want to keep the balance down.
With a home reversion plan, you sell all or part of your home to a provider in return for a lump sum or regular payments, and keep the right to live there. You'll normally receive between 20% and 60% of the market value of the part you sell. Home reversion plans are usually available from age 60 or 65.
Safeguards to look for
Plans that meet the Equity Release Council's standards include important protections. You can stay in your home for life, or until you need long-term care, as long as it remains your main home. Interest on a lifetime mortgage is fixed, or capped if it's variable, for the life of the loan. You can move to another property if the provider accepts it, and you have the right to make penalty-free payments, subject to the lender's criteria.
They also include a no-negative-equity guarantee. When your home is sold and the agents' and solicitors' fees are paid, neither you nor your estate will have to pay any shortfall, even if the loan has grown to more than the home is worth.
The costs, and the effect on your family
Lifetime mortgages usually have higher interest rates than ordinary mortgages, and because interest is normally added to the loan, the amount owed can grow quickly. There are also set-up costs, such as arrangement, valuation and legal fees. Early repayment charges may apply if you repay the plan early, other than on death or a move into long-term care.
Any money you release reduces what you can leave to your family. Many plans let you protect a percentage of your home's value as an inheritance, and we'll show you how the figures could look over time with a personalised illustration.
Alternatives we'll talk about
Equity release isn't right for everyone. Depending on your situation, downsizing, a retirement interest-only mortgage, help from family, using savings, or simply checking you're claiming every benefit you're entitled to could suit you better. We go through these with you first, so you can make the choice with the full picture.
Advice and legal checks
Equity release advice must come from an adviser with a specialist qualification, and our equity release advisers hold it. You'll also need your own solicitor to explain the legal side before a plan goes ahead. We'll tell you at the start exactly what any advice costs, and family members are welcome at every meeting.
How we help
- Lifetime mortgages and home reversion plans explained clearly
- A personalised illustration showing how the loan could grow
- Checks that your plan meets the Equity Release Council's standards
- Alternatives such as downsizing or retirement interest-only mortgages
- Family welcome at every meeting
Questions people ask
Will I still own my home?
With a lifetime mortgage, yes. The loan plus interest is usually repaid when the home is sold after you die or move into long-term care.
How old do I need to be for equity release?
Lifetime mortgages are usually available from age 55, and home reversion plans from around 60 or 65.
Will my family still inherit?
Equity release reduces what you leave behind, because the loan and interest are repaid from your home when you die or move into long-term care. Many plans let you protect part of your home's value for inheritance, and we encourage you to involve your family in the conversation.
Could I end up owing more than my home is worth?
Plans that meet the Equity Release Council's standards include a no-negative-equity guarantee, so you or your estate won't owe more than your home sells for.
How much money can I release?
It depends mainly on your age, your home's value and, with some plans, your health. The older you are, the more you can usually release. We'll give you a personalised illustration showing the figures.
Do I have to make monthly repayments?
Not usually. With most lifetime mortgages the interest is added to the loan. Some plans let you pay some or all of the interest each month to stop the balance growing.
Will equity release affect my benefits?
It can. Money you release may affect your entitlement to means-tested benefits such as Pension Credit. We'll check this with you before you decide.
Can I move house after taking equity release?
Plans that meet the Equity Release Council's standards let you move to another property, as long as the provider accepts it as security for the loan.