Equity Release FAQs

Note: all equity release enquiries are passed to a third party equity release specialist company.

Record house prices across the United Kingdom are encouraging more homeowners than ever before to consider equity release. In the FAQ below, you will find concise answers to some of the most important questions on the applications, advantages, and potential disadvantages of equity release schemes in the UK.

Get independent advice

Before considering equity release, consult with an independent broker for honest and impartial advice you will need to make the right choices.

The term ‘equity release’ refers to any financial product or service that enables you to access the money you have tied up in your home. Equity is the proportion of your property you currently own – i.e. the market value of your property minus your outstanding mortgage debts. With equity release, you can use the equity you have in your home to access either a lump-sum payment or regular cash instalments – all 100% tax free.

The first step is to seek expert advice from an independent source. Under no circumstances is it advisable to consult directly with an equity release specialist in the first instance, as they may not provide the objective and impartial advice you need to make the right decision. Only after carefully considering the advantages and disadvantages should you go ahead with an equity release application. You will need to provide evidence of your home’s value, your outstanding mortgage debt (where applicable) and other necessary documentation.

The two main types of equity release are the lifetime mortgage and the home reversion plan. A lifetime mortgage is a loan, like a standard mortgage product, that is issued against your home and repaid when the home is sold after you die or move into residential care. This mortgage type however does not normally require monthly payments. With a home reversion plan, you sell some, or all, of your home to an equity release specialist, who will allow you to continue living in your home until you die or move into residential care. The difference being that with a home reversion plan, you are no longer the full owner of the property for your remaining residency.

To help provide a rough indication of how much equity you could gain access to, we have created a helpful online equity release calculator. Simply enter a few basic details to find out how much of your home’s value you could access with a competitive equity release scheme.

A lifetime mortgage enables you to retain full ownership of your property, as the lender simply issues a loan against the value of your home – not dissimilar to a traditional mortgage. However, no monthly repayments are required (unless you wish to make them) and the mortgage does not have a fixed term. It continues until you die or move into residential care, at which point the balance of the mortgage plus interest is due.

Equity release schemes have several potential complications and disadvantages which must be considered. Tapping into the money you have tied up in your home could affect your eligibility for certain benefits and bursaries. In addition, most types of equity release will significantly reduce the value of your estate, thereby reducing inheritance for your heirs and beneficiaries. Depending on the equity release program you choose, the price you receive for your home (in part or in full) could be significantly lower than its true market value. All of which should be discussed with an independent adviser, before going ahead with an equity release application.

A home reversion plan involves selling part or the whole of your property in return for a lump sum. While you will no longer own any or a part of your home you will be able to remain living there for the rest of your life rent free. The amount you are offered will generally be below market value.