Equity Release Facts

All the Details You Need to Know About Equity Release in the UK

Don't Get Caught Unaware! Here Are Some of the Top Equity Release Facts You Need to Know to Make Sure You Understand How Unlocking the Value of Your Property Can Boost Your Finances.

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Equity Release Facts

Know these equity release facts will prevent you from being fooled by fiction!

More and more homeowners over 55 are using equity release to unlock the cash tied into their estate every year. However, entering into an equity release plan without the right knowledge could be detrimental to your finances.

AND, If you’re not aware of all the facts, you could miss out on golden equity release opportunities.

We’re here to help you discover:

  • Intricate details of the equity release market.
  • How to get the most from your equity release plan.
  • If releasing equity is the best way to fund retirement.
  • If equity release is safe for retirees and their families.

Through extensive market research and combing over 220 plans, we’ve put together the 5 equity release facts that you need to know.

Are you wondering what these are? Continue reading to find out now!

What You MUST Know

Before you do so, first check out this quick video that summarises what you need to know about equity release:

5 Things You Might Not Know About Equity Release

So by now, you should understand what’s equity release, and are looking for all the facts.

Here are the 5 most critical facts to consider before releasing equity from your home:

You Can’t Pass On the Debt

1. You Can Make Multiple Withdrawals With Equity Release

While you can release your cash in one big lump sum, you don’t have to!

You can release equity in 3 ways:

  • A single lump sum, generally to fund a big project, an investment, or pay for your dream holiday.
  • A few smaller lump sums, should you wish to have a few large cash injections over a period of time.
  • Monthly payments that will function like a salary. You can take out one initial amount, followed by these smaller monthly payments.

You can read more about: The Common Myths Told About Equity Release

Be Sure to Get Financial and Legal Advice Before Taking Out a Plan

2. You Can Pay Back the Interest on Your Loan

One of the biggest pros of releasing equity from your home is that there is zero obligation to pay back any of the loan, or interest, during your lifetime.

Equity release interest is compound which means that the debt gradually increases with time.

Know more about: How Interest Rates Work With Equity Release

While there’s indeed no obligation, should you wish to, some products allow you to pay back the interest, or the debt, in monthly instalments or a lump sum. By doing so, you decrease the amount owed when you pass away or when you need to move into permanent care.

Why’s this good?

By reducing the amount owed on your equity release, your family will pay less from the sale of your home and, in turn, could receive a larger inheritance.

Find out more regarding: Getting the Right Advice for Your Needs

There Are Certain Guidelines to Moving Homes

3. Most Equity Release Products Have a ‘No Negative Equity Gaurantee’

A ‘no negative equity guarantee’ has been set by the Equity Release Council to ensure that your family is not left with equity release debt when you pass away or move into permanent care.

In a nutshell, the guarantee ensures that any additional funds owed from your equity release will be written off if they exceed the resale value of your home, even if property prices plummet.

Basically, if your house is sold and the loan, plus interest, exceeds the sale price, nothing further will be owed. If, however, there are leftover funds after the loan, plus interest, is covered, this income will go to your heirs.

Check out: How Equity Release Can Help You Leave a Legacy Whilst You Are Still Alive

The Equity Release Council is the body that regulates the equity release market. It’s vital when looking to release equity from your home to avoid any companies that are not members of the council.

You Don’t Have to Pay Back the Cash

4. You Have the Right to Stay In Your Home

According to the rules set out by the Equity Release Council, you have the right to stay in your home throughout the course of your equity release plan.

Isn’t that fantastic?

In other words, whether you go with a lifetime mortgage or a home reversion scheme, you will be allowed to live in your house until you die or move into permanent care.

Equity Release Facts

5. You Don’t Have to Own Your Home Outright to Be Eligible for Equity Release

Great news!

You can still take out an equity release plan even if you have a remaining mortgage. This might just reduce the amount that you can access.

In addition, most lenders will expect you to use the funds you receive to pay off your mortgage, giving you the remaining equity to spend as you wish.

Check out: Common Requirements When Taking Out an Equity Release Loan

Value Amount

Got Questions About the Equity Release Facts? Check These Out First!

Can You Lose Your House with Equity Release?

Can Equity Release be Paid Back?

Do I Pay Tax on Equity Release?

In Conclusion

After learning these facts, are you still wondering: “is equity release a good idea?” The short answer is yes!

Equity release can be an excellent financial plan to provide UK residents over 55 a stress-free retirement if done right.

If you or your family are considering equity release, you must think carefully, weigh up all the pros and cons, and discover the pitfalls before making your final decision!

How Much Can You Release?

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What people say

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  1. Developing Equity Release Markets: Risk Analysis for Reverse Mortgages and Home Reversions
    2014 The North American Actuarial Journal Volume: 18, Issue: 1, pp 217-241 DOI: 10.1080/10920277.2014.882252
    Daniel H. Alai 1,Hua Chen 2,Daniel Cho 3,Katja Hanewald 1,Michael Sherris 1
    1 University of New South Wales ,2 Temple University ,3 Suncorp Life, Sydney, Australia 123
  2. The Valuation of No-Negative Equity Guarantees and Equity Release Mortgages
    2019 Economics Letters Volume: 184, pp 108669 DOI: 10.1016/J.ECONLET.2019.108669
    K. Dowd 1,D. Blake 2,D. Buckner 3,J. Fry 4
    1 Durham University ,2 University of London ,3 The Eumaeus Project, UK,4 University of Bradford 1234
  3. Reverse Mortgages and Linked Securities: The Complete Guide to Risk, Pricing, and Regulation
    2010
    Vishaal B. Bhuyan 12
  4. Exploring ‘Housing asset-based welfare’: Can the UK be held up as an example for Europe?
    2009 Housing Studies Volume: 24, Issue: 5, pp 669-692 DOI: 10.1080/02673030903083326
    Janneke Toussaint ,Marja Elsinga
    Delft University of Technology 12
  5. Asset-based Welfare, Equity Release and the Meaning of the Owned Home
    2015 Housing Studies Volume: 30, Issue: 3, pp 392-412 DOI: 10.1080/02673037.2014.963523
    Lorna Fox O’mahony ,Louise Overton
    University of Essex 1234
  6. PORTFOLIO CHOICE IN RETIREMENT—WHAT IS THE OPTIMAL HOME EQUITY RELEASE PRODUCT?
    2016 Journal of Risk and Insurance Volume: 83, Issue: 2, pp 421-446 DOI: 10.1111/JORI.12068
    Katja Hanewald 1,Thomas Post 2,Michael Sherris 1
    1 University of New South Wales ,2 Finance 12345
  7. ‘Living Poor to Die Rich’? Or ‘Spending the Kids’ Inheritance’? Attitudes to Assets and Inheritance in Later Life
    2006 Journal of Social Policy Volume: 35, Issue: 2, pp 175-192 DOI: 10.1017/S0047279405009475
    Karen Rowlingson 1234
  8. The market for equity release products: lessons from the international experience
    2010 Southern African Business Review Volume: 14, Issue: 2, pp 24-45
    J. M. Luiz ,G. Stobie
    University of the Witwatersrand 123
  9. Pricing and Risk Capital in the Equity Release Market
    2008 British Actuarial Journal Volume: 14, Issue: 1, pp 41-91 DOI: 10.1017/S1357321700001628
    G. M. Hosty 1,S. J. Groves 2,C. A. Murray ,M. Shah
    1 Partnership Assurance, Sackville House, 143-149 Fenchurch Street, London EC3M 6BN, U.K. Tel: +44(0)7712789154,2 Email: ged.hosty@partnership.co.uk 123
  10. HOMEOWNERSHIP, SOCIAL INSURANCE, AND OLD-AGE SECURITY IN THE UNITED STATES AND EUROPE
    2017 Innovation in Aging Volume: 1, pp 183-184 DOI: 10.1093/GERONI/IGX004.703
    Stipica Mudrazija ,Barbara A. Butrica
    Urban Institute 12

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HOW MUCH EQUITY CAN YOU RELEASE?

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Value of Your Home?

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