6 Equity Release Criteria

Equity Release Rules All Homeowners Should Know

We Compiled the Most Important Equity Release Criteria & Rules. Find Out If You Qualify in This Easy Step-By-Step Guide To Help You Understand How It Works.

Equity Release Criteria & Rules You Must Know
In this Article

Are you a property owner over the age of 55 looking to release equity from your home?

Once you know what’s equity release, you’ll understand all the rules of equity release and basic criteria. Now it’s time to take your research to the next level. So you think that you qualify, but you’re still not entirely sure?

Continue reading to learn more about 6 frequently asked questions when it comes to equity release criteria!

What You MUST Know

Before continuing, check out this quick video of the most important information on equity release.

6 IMPORTANT Equity Release Criteria Questions

As a homeowner in the UK, who is over 55, you likely qualify for equity release. There is, however, some criteria that might be relevant for you.

Check these out!

1.     Is there a minimum and a maximum loan amount?

There is, in fact, a rule of the minimum amount of equity that you can release from your home. In general, this is £10 000. However, your equity release costs can be deducted from this amount.

Take note: The minimum amount can differ from one plan to another. Your financial adviser will have this information for you.

The maximum loan amount will depend on the value of your property and your age. Some lenders do cap this amount. However, others will refer your case to another lender, should you wish to exceed their cap.

The Property Criteria

2.     Does one have to have a good credit score to get an equity release?

Unlike traditional mortgages, you are not obligated to make any repayments in your lifetime with an equity release. Therefore, your past income and expenditure are not heavily scrutinised for equity release.

Lenders will generally overlook a poor credit history, depending on how severe the situation is. This will, however, differ from one lender to another, according to their terms and conditions. You will never be able to release equity while you are in an undischarged bankruptcy.

Some lenders will request you pay any outstanding IVA’s or County Court Judgements, using a portion of the equity you release.  

Finally, there are a handful of lenders who may not even do a credit check. You can inquire about this with your financial adviser.

The Homeowner’s Age

3.     Can you get equity release on all property types?

The great news is that equity can be released from any standard construction property. These include:

  • Houses
  • Flats
  • Bungalows

Additional criteria may also be considered by some lenders, like a 100% flat roof, those with some commercial activity, certain spray foam insulation, and properties with an annexe.

Concrete, timber-framed and metal-framed properties may be declined for equity release. This will depend on the type and age of construction.

The Loan Amount

4.     Can you release equity from a leasehold property?

If the remaining lease length meets your equity release lender’s underwriting requirements, then you can release equity from the property. These criteria may differ between lenders.

In addition, you can look at extending your lease as part of the equity release process if the current length doesn’t qualify, which may incur additional charges.

The Location of your Home

5.     Can you release equity from an ex-local authority property?

Yes, you can release equity on ex-local authority properties. However, the lender will consider the number of local-authority owned properties in the area.

The minimum property value accepted for a flat is £200 000 in such cases.

If the freeholder of your leasehold property is the council, the lender may require you to purchase the freehold, before you can release equity from your home. Any additional costs can come from the equity released.

Note that in these instances, the equity release process might take a little longer.

Your Credit History

6.     Does the location of your property matter?

First off, your property must be located within the UK to qualify for equity release.

The individual lender will decide if they are willing to release equity from a property in your specific area.  Some lenders will only work with properties on the mainland, while others will release equity from properties on some or all islands.

Ask your financial adviser if the location of your property could be a potential issue.

Got Questions? Check These First!

Who Qualifies For Equity Release?

How old do you need to be for equity release?

Do You Have To Be 55 For Equity Release?

Can One Release Equity if They’re 54?

Can Equity Release be Refused?

How Does One Qualify for a Lifetime Mortgage Scheme?

What’s the Maximum Age for a Lifetime Mortgage?

Can You Release Equity with a Mortgage?

Can I Take Out an Equity Release Plan for a Second Home?

Does Equity Release Require Credit Checks?

Do You Need Good Credit Score for Equity Release?

Can You Get Equity Release with Bad Credit?

Can I Sell My House and Still Live In It?

How Frequently Can You Release Equity?

In Conclusion

Do you think that equity release might be the perfect way to give your retirement the cash injection of your dreams?

If so, be sure to understand all the pitfalls of equity release and look at the equity release alternatives before making your final decision.

In addition, you must get in touch with an independent financial adviser to start your equity release journey and use our equity release calculator to find out how much cash is tied up into your home!

With the right guidance and a full understanding of the rules, equity release can be a straightforward, stress-free process. What are you waiting for?

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