What is equity release?

Equity release products are available to homeowners aged 55+ and enable them to release money from the value of their home following a regulated process of financial advice and independent legal advice. Equity can be released from your home in one payment or as a specific amount each month.

Why do people decide to release equity from their homes?

There are a number of reasons why people decide to release equity from their homes. One is so the homeowner can retire in the knowledge they are financially secure. Equity released can also pay for care costs, DIY at home, gifts to family members or purchasing a second property.

What is a lifetime mortgage?

A Lifetime Mortgage is one that does not require any monthly repayments and, whilst all roll up the interest on a compound basis, many offer repayment options. Fundamentally the client retains total ownership of the home, and the mortgage is generally not repayable until the last remaining party to the mortgage dies or moves into care. The client retains the full proceeds from the sale of the property after settlement of the mortgage and rolled-up interest.

What is a home reversion plan?

A Home reversion plan involves the sale of some or all of your property whilst retaining the right to remain in the property rent free for the rest of one's life. However, the funder who owns the property and the client will not have benefited from property inflation in the way they would do with a Lifetime Mortgage. Conversely, they will not be liable for any reduction in the value of the home.

Do I qualify for equity release?

Eligibility for equity release depends on the age of the youngest person on the title deeds of your property and some factors relating to your home. You must be over 55 to qualify for a lifetime mortgage and at least 65 for a home reversion plan. The location of your home, the value and condition of the property and the size of your mortgage are all important factors that will determine eligibility.

Are there any tax implications for equity release?

Any money taken out of your property is tax-free. However, if the client decides to place the money released into a savings account or through income by the way of annuity then you may have to pay tax on any income received.

What happens if I move into residential care?

Any lifetime mortgage product guarantees the right for homeowners to live in their property until they either die or have to go into long-term residential care. If there is more than one applicant and one of you has to go into care, the other person is able to stay in their home.

Is there any financial risk to my family because of equity release?

All equity release schemes boast the promise of leaving no negative equity behind. It means when the last person living in the property either dies or goes into long-term care, the amount that is needed to be repaid will never be more than the value of the property.


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Equity release



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