To be eligible for Equity Release you must be aged 55 and over and own your own home. (If it is in joint names then you must both be over the age of 55).
Equity Release allows you access to the tax-free cash tied up in your home. The money released can be used for any purpose.
The amount available is based on your age, the value of your property, and your health.

The options

There are a number of different types of Equity Release available at this time.

Lump Sum Lifetime Mortgage

A Lifetime mortgage is one type of equity release.

With all lifetime mortgages you retain 100% ownership of your property, just like a traditional mortgage.

You can release a lump sum of tax-free cash or regular additional income from the equity in your property. The money can be used as you see fit.

There are no regular monthly payments to make. Interest is added to the loan amount at an agreed rate from the time you release the money until the loan ends. This is often referred to as “rolled-up” interest.

The loan usually ends when the applicant either dies or enters into long term care, or permanently leaves the property, at which point the property is sold and the loan repaid. Any remaining equity then forms part of the estate or is returned to the owner.

The money released is not subject to income tax or capital gains tax.

(Please be aware however that depending on what you do with the money you have released you may inadvertently create a tax liability, for this reason please seek independent Equity Release advice)

Draw-down Lifetime Mortgage

A Draw-down Lifetime Mortgage works in exactly the same way as a Lump Sum Lifetime Mortgage. The only difference being is that you do not need to release all the money you are eligible for straightaway. You can release money as and when you need it.

An initial lump sum must be taken though. At present the minimum is £10,000 but please be mindful that some lenders have a higher minimum initial lump sum.

Again, there are no regular monthly payments to make. Interest is added to the loan amount at an agreed rate from the time you release the money until the loan ends. This is often referred to as “rolled-up” interest.

Also, like the Lump Sum Lifetime Mortgage, the loan usually ends when the applicant either dies or enters into long term care, or permanently leaves the property, at which point the property is sold and the loan repaid. Any remaining equity then forms part of the estate or is returned to the owner.

For example, if you were eligible to release £50,000, but you only wished to take an initial lump sum of £20,000, the remaining £30,000 would be set aside for you to use at a time of your choosing.

Please be aware that the rate of interest charged on any future withdrawals from the draw-down facility may be at a different rate to that of the initial amount taken. You will be informed of the rate at the time you make any further withdrawals.

The benefit of such a scheme is that by releasing money only as and when it is needed you are only charged for money you actually use, therefore the “roll up” of interest is less that it would if you were to have taken all the money in one lump sum initially.

The down side of a Draw-down Lifetime Mortgage is that the overall amount available is slightly less than if you were to take the maximum amount available as a lump sum. That said, the interest rates on a Draw-down Lifetime Mortgage are usually lower than if you were to take the maximum lump sum.

Interest Only Lifetime Mortgage

A variation on the Lifetime Mortgage.

The key difference with this option is that you can opt to make a monthly payment of the interest only, thereby avoiding the “roll-up” of interest”.

You must decide whether you wish to do this or not from the point at which the plan is set up. This will have a significant bearing on which plan is recommended.

Your income and your ability to afford the monthly payment will be assessed in very much the same way a traditional mortgage would be.

Most Interest Only Lifetime Mortgages plans offer the option to no longer continue to have to make the monthly payments, should your circumstances change for example.

In such circumstances the interest would then “roll-up” like it would on a normal Lifetime Mortgage. (Please be aware that depending on the lender this may affect the interest rate charged).

Also, like the Lump Sum Lifetime Mortgage, the loan usually ends when the applicant either dies or enters into long term care, or permanently leaves the property, at which point the property is sold and the loan repaid. Any remaining equity then forms part of the estate or is returned to the owner.

Professional Advice

Mortgage ID work exclusively with Age Partnership, the UK’s largest Equity Release experts. We recognise that this is an area where specialist advice is essential. Advice where the advisor travels to your home to discuss your personal situation fact to face. We will undertake the initial fact find and then pass this to a fully CeReR (Certificate in Regulated Equity Release) licensed agent to undertake a comprehensive follow-up. We remain fully engaged in the process throughout but we do not provide the advice.

Interest rates

The rate of interest charged can be fixed or variable. You do have the opportunity to fix the rate of interest for the lifetime of the loan.

The rates of interest are slightly higher than the traditional mortgage market, however, please do not lose sight of the fact that the rate can be fixed for your lifetime. In some cases this could be 15 to 20 years.

Home Reversion

With a home reversion plan you can sell some or all of your home in exchange for a lump sum, whilst still retaining the right to remain in the property until the plan ends.

The key difference with a Home Reversion plan is that you will relinquish ownership of some or all of your property. As a result of this you will only benefit from any increase in the value of the property on the share you have retained.

Again, the loan usually ends when the applicant either dies or enters into long term care, or permanently leaves the property, at which point the property is sold and the loan repaid. Any remaining equity then forms part of the estate. The remaining equity in the property is essentially any part of the property you have not sold to the lender up until that point.

Important note:
If you are considering releasing equity from your home it is essential that you speak with an expert Equity Release Specialist from a company offering independent advice because all forms of Equity Release will reduce the overall value of your estate.

FAQ’s

Am I eligible?

To be eligible for Equity Release you must be aged 55 and over and own your own home. (If in joint names then you must both be over the age of 55).

Is Equity Release right for me?

Whilst many people have benefited from Equity Release, each person’s circumstances are very unique, therefore there is no hard and fast rule regarding this. Indeed, for a lot of people Equity Release is not the most suitable option.

To establish whether Equity Release is truly the right option for you then we advise that you speak to an independent Equity Release Specialist. Via this site we are able to put you in contact with a suitably qualified adviser in your local area.

Please also see the section on this site “Is Equity Release right for me”?

How much can I release?

The amount available to you depends on your age and the value of your property.

The amount available is expressed as a percentage of the value of your property depending on how old you are.

The older you are the more you can release, up to a maximum of 50% of the value of your home.

In some instances, the amount available can be increased slightly if your health is not 100%.

What can I use it for?

Money obtained as result of Equity Release can be used for any legal purpose.

What if my partner or I need long-term care?

Your equity release plan will carry on as normal if care is provided in your own home or if one of you moves to a residential or nursing care.

If you both move into care, the plan will usually end at that point and the property will be sold, and the loan repaid.

What if I decide to repay the loan or move home?

If you choose to move home there is the option of being able to take the plan with you, subject to an assessment of the new property by your lender, and assuming it meets their criteria at the time you wish to move.

As the name suggests, a Lifetime Mortgage is designed to be for your lifetime, but as with any mortgage, you have the right of redemption, in other words the ability to repay it at any time within the term of the loan.

If you decide to repay the loan before the plan would normally end, then this is classed as repaying the loan early, and for that there may be an Early Repayment Charge. This differs from lender to lender.

If there is a reasonable likelihood that you may wish to repay the loan early then you must consider whether Equity Release is the best option for you.

Can the Equity Release plan provider change the agreement?

The original contract signed with your solicitor is legally binding on both the lender and yourself. It cannot be changed.

Why take independent advice?

In order to advise on Equity Release your financial adviser needs to have passed an extra qualification to practice in this specialist area. Many mortgage and insurance advisers practice exclusively in these two areas in order to maintain their knowledge base and leave Equity Release to specialists. In other words, equity release advisors are the best people to use to advice in this area, not a mortgage broker or IFA.

Most Equity Release lenders in the current market will not deal directly with the public when it comes to providing advice and recommendations as to the suitability of Equity Release. Most of them insist that independent advice has been provided before they will even accept an application from you.

As a consumer it is crucial that you receive independent advice as there are many plans to choose from and opting for the right plan could save you a substantial amount of money in the longer term.

Consumer safety & protection

The Financial Conduct Authority (FCA)

Equity Release is classed as a regulated mortgage contract, therefore it is subject to the same stringent oversight by the FCA as all other mortgage contracts in the UK.

Qualified advice

Giving advice on all types of mortgages including Lifetime mortgage or Home Reversion plans is a regulated activity under the Financial Services Act 2000. Anyone offering advice in either of these areas must be appropriately authorised by the Regulator, the Financial Conduct Authority (FCA).

Mortgage ID offers advice on residential and commercial mortgages and we refer all our Equity Release business to our partner – Lloyd Kinsey of Age Partnership. Lloyd is highly qualified to advise our clients on all aspects of equity release. He possesses CeMAP (Certificate in Regulated Mortgage Advice and Practice) and the CeRER (Certificate in Regulated Equity Release)

Lloyd Kinsey will provide advice on Lifetime Mortgages and Home Reversions only. We encourage you to request to see his qualifications and request testimonials from past clients to confirm his competence to help you.

Legal Advice (choosing a solicitor)

You are entitled to choose whichever solicitor you wish.

The crucial factors to consider when nominating the solicitor to act for you are:

1. Have they done Equity Release work before?
2. Do they operate on a fixed fee basis?

All Mortgage ID’s trusted panel of solicitors are highly experienced in this specialist area and operate fixed charging structures. Please ask for a referral to one of our panel for a quote.

As part of the application process your solicitor will insist on you attending a face to face meeting with them. This is designed to safe-guard you as a consumer by establishing that you are fully aware of the facts regarding what you are entering into, the costs involved, and the implications on your estate.

If your application is a joint application both parties must be present at the solicitor’s appointment.

Please note that if there is someone living in the house who is 18 or over, and not named on the application, they will be asked to sign a form that states that they will seek alternative accommodation should they still be there when the plan ends. This must be done in the presence of a solicitor, and it must not be the same solicitor as the one advising the applicants.

Please be mindful that not all solicitors offer to undertake Equity Release work. Via this site we are happy to point you in the direction of trusted solicitors who offer a good level of service.

Is Equity Release right for you?

Only you can make the decision as to whether Equity Release is for you.

Mortgage ID’s team will discuss the alternatives with you and guide you to the best solution. Whether it be a standard remortgage, a secured loan or an Equity Release product you can rely on receiving advice from us and Age Partnership which you can trust.

Get advice

If you wish to obtain independent advice on whether Equity Release is right for you, simply click the button below and fill out the short form.
An appropriate qualified advisor will contact you, usually by return without any obligation.

Important note:

It is highly recommended that either a family member, beneficiary or independent representative is present during your discussions with our Equity Release Adviser. Most Equity Release advisers actively recommend this as best practice.