Equity Release Criteria

Do You Qualify?

I think you’ll agree with me when I say…

There’s a lot to learn when it comes to equity release.

Lucky for you, here is a comprehensive guide to the process of equity release schemes. By perusing this guide, you can finally understand what is required of you when taking out an equity release plan and if you qualify for one.

The Qualification Criteria

If you are property rich and over 55, you might be eligible for an equity release scheme.

However, there are several considerations your lender will require you to fulfill before submitting your application.

These are typically split into several categories, which equity release provider use to evaluate whether you can release from your estate.

#01. The Property Criteria

According to most lenders, the minimum value of your home should be at least £70,000. Theoretically, there is no maximum limit, but, some set theirs to safeguard themselves from risk.

Your property’s condition is also something that lenders take seriously. You are expected to have your home in pristine conditions and properly maintained. If you have clutter or you need repairs done, your provider can decline you.

Therefore, before your application, make sure you have your home in a pristine condition, and get that money without having several hiccups.

#02. The Homeowner’s Age

Currently, according to FCA and ERC, the minimum age at which a homeowner can take out a lifetime mortgage is 55. Nevertheless, for some, at least 60 years.

The age of the youngest proprietor forms the basis of the equity release calculation. It determines how much money you can release.

Since the minimum age can differ from one scheme to another, you must ensure that you always consult your financial adviser to ascertain beforehand whether your eligibility may be a problem.

#03. The Loan Amount

Depending on your plan provider, the minimum amount you can take out with a lifetime mortgage is £10,000. However, for some it can be at £15,000, or even £100,000 on more prestigious plans.

The maximum you can borrow is dependent on the youngest person in your residence, their medical status and lifestyle choices, age, and of course, the estate’s value.

The older you or your spouse is, the higher the maximum equity release loan you can unlock from your home.

You also need to note that before you go ahead and ask your lender or before you go on to calculate the equity you can release, you first have to repay any outstanding mortgages.

You can opt to redeem the mortgage before the application stage, or when you are unlocking the capital from your home and use to clear the mortgage amount.

Your solicitor will plan this for you, therefore getting rid of the need to pay the funds directly to your mortgage provider.

You can use our equity release calculator below and discover the maximum amount of equity you can release.

#04. The Property’s Area

For you to qualify for equity release, it needs to be in the UK.

You also need to note that some plan providers can choose to impose localised rulings as to whether they can include extremes of the UK within their remit.

For example, Northern Ireland is presently constrained to just two lenders.

Most providers, however, insist that your property must be located on the mainland, thus ruling out specific islands.

For example, The Isle of Man is often left out, while most lifetime mortgage plan providers accept the Isle of Wight.

So, before rushing to make any final decisions, be sure to check with your professional adviser and get to know if your location is a potential issue.

#05. Your Credit History

Equity release schemes typically don’t require you to make any monthly repayments, meaning that the lending criteria is a bit more relaxed than when you are applying for residential mortgages.

However, the matter of whether poor credit will stop you from unlocking the equity from your home depends entirely on the severity of your situation as well as your plan provider’s terms and conditions.

For instance, with most lifetime mortgage schemes, depending on the equity release you choose, do not undertake any form of credit check.

Like the rest, your eligibility will entirely depend on you.

As with any other financial plan, you should not make any rushed decisions when it comes to equity release, especially without a complete understanding of how it works, and the expected requirements. So, before you decide that it is what you need in your life right now, be sure to research it, consult your financial adviser, consider your options and then make an informed decision.

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