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 qualification 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.

How Much Equity Can You Release? Use Our Free Equity Release Calculator UK

Speak to an Expert » Get a FREE Equity Release Quote Now

The Qualification Criteria

If you are property rich and over the age of 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 criteria are typically split into several categories, which equity release providers use to evaluate whether you can release capital from your estate.

They include:

#01. The Property Criteria

According to most lenders, the minimum estate value of your home should be at least £70,000. Theoretically, there is no maximum limit, but, some plan providers set their maximum values 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. For instance, if you have clutter in your estate, or you need repairs done, your plan provider can decline your application.

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

#02. The Homeowner’s Age

Currently, according to FCA and ERC, the youngest age at which a homeowner can take out a lifetime mortgage is 55. Nevertheless, some plan providers require you to be at least 60 years of age.

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, some plan providers can set it at £15,000, or even £100,000 on more prestigious plans.

The maximum amount you can borrow is dependent on the age of the youngest person in your residence, their medical status and lifestyle choices, 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 amount of equity you can release, you first have to ensure that you 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 the funds to clear the outstanding 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 Location

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

You also need to note that some plan providers can choose to impose localized 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 plan providers, however, insist that your estate 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 estate’s 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 estate 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 company you choose, do not undertake any form of credit check.

Like the rest of the criteria, your eligibility will entirely depend on your situation.

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.

That said, if you’ve got any questions or need more information on what equity release is, lifetime mortgages or home reversion plans, then be sure to click here not only see how much equity you can release but to chat with an expert for free!