Equity Release Learning Centre
The best place to find information about equity release schemes.
What’s equity release? We’re here to help you understand if you qualify, the in’s and out’s, the pros and cons, and expertly guide you in deciding if equity release is the perfect way for you to enjoy the stress-free retirement of your dreams!
With extensive research on every regulated scheme provider, a detailed analysis of over 220 plans, and keeping up to date with the latest equity release news, you’re in the best hands to be assisted in making this life-changing decision. We’ll show you how!
About Equity Release
Looking for a Simple Explanation of Equity Release? Read Through Our Guide Here
Do You Want to Learn More About Equity Release Schemes? We Explain All the Nitty-Gritty Details to Help You Understand the Process Completely.
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What is Equity Release and Who Qualifies?
Don’t miss out on a golden retirement opportunity!
Retirement is around the corner. If you don’t act now, you could find yourself in a situation where you’re left cash strapped, with nowhere to turn. Now’s the time to access your share of the £2m already released in 2021.
- The secret to using an equity release mortgage safely and correctly.
- An introduction to equity release and how it could change your life.
- The types of equity release.
- A comprehensive guide on how equity release works.
With more than 10 expert consultations and many hours spent engrossed in researching over 220 plans – we’re in the ideal position to help you figure this out.
Perhaps an equity release mortgage could be the solution you’ve been looking for?
Continue reading to find out more NOW!
What You MUST Know
Before you continue reading, check out this quick video that sums up the most important information about equity release:
How Does Equity Release Work?
An equity release mortgage is, in a nutshell, a loan plus interest that is paid back when the homeowner passes away or goes into permanent care. The homeowner’s family usually pays back the cash released, and the interest incurred, from the sale of the home in question.
Equity release is available for individuals or couples over 55, with the youngest homeowner’s age determining the amount of equity that can be released. It is important to note that some equity release schemes may require the homeowner to be 60 or older.
The money you release can be taken as a lump sum or paid out in several smaller sums (or a combination of the 2).
You can contact your financial adviser to help assist you to find the perfect plan for you!
Understand more about: The Equity Release Process
Learn more by checking: The 8 Major Pitfalls Associated With Releasing Equity
7 Types of Arrangements
Lifetime Mortgage: A loan against the value of your property. As the most common form of equity release mortgage, you’ll unlock the cash tied into your home without having to make any repayments. The loan, plus compound interest, is repaid when you pass away or move into permanent care.
Interest-Only: You’ll make monthly interest repayments. But, the loan amount is only repaid when you pass away or move into permanent care, usually from the sale of your home.
Retirement Interest-Only Mortgage (RIO’s): Approved by the FCA and introduced in 2018, the RIO is an interest-only mortgage for homeowners over 55. An affordability check will be required as you’re expected to pay back the interest monthly. The loan is only paid back at the end of your life or when you move into long-term care.
Home Reversion: You’ll sell all or a portion of your home to your lender at below market value. In return, you receive a lump-sum or monthly payments. The lender gets their share of your estate upon the sale when you pass away or move into permanent care.
Shared Appreciation Mortgage: You’ll be loaned a capital sum in return for a share of the future property value growth. The borrowers have permission to live on the property until death. Your age determines the share percentage. However, These arrangements are no longer available in the UK.
Home Income Plan: These are lifetime mortgages where the capital is used to provide an income by purchasing an annuity provided by the lender, usually an insurance company.
UK Equity Release Schemes: They’re available to homeowners over 55 whose property value is a minimum of £70,000. To qualify for an equity release, you need to own your home outright or have a small mortgage remaining.
Learn more about: The Leading Providers in the Equity Release Market
2 Main Types of Equity Release Products
There are 2 main types of equity release, a lifetime mortgage and a home reversion plan. It is essential to understand the details of both plans so that you can decide which works best for you.
How Does Equity Release Work With a Lifetime Mortgage
With this most common form of equity release, you can secure it against your primary residence. A lifetime mortgage is tailored to run for your lifetime, during which the house remains 100% yours, and therefore stays in your name!
Unlike traditional residential mortgages, it has no payment requirements, and you can continue living in your home. The money you release is repaid (plus interest), when your home has been sold or if you relocate to long-term care.
If there’s any cash left after the loan has been settled, it goes to your estate and can be distributed as per your will.
But wait, there’s another option you should be aware of!
With the current economic challenges and changes, more and more providers will allow you to make voluntary repayments to aid you in controlling the balance if needed.
There are several flexible options, and they offer you the ability to:
- Pay monthly or ad hoc to help you control your mortgage balance.
- Protect a percentage of your estate with an Inheritance Protection Guarantee.
- Make tax-free equity withdrawals on a drawdown basis, following the establishment of an initial cash reserve facility.
- Have downsizing protection and compassionate early repayment, both assist in negating the need for early repayment charges.
- Borrow more or offer a lower interest based on one’s health and lifestyle conditions.
Learn more by checking: The Best Deals Available for Releasing Equity
How Does Equity Release Work With a Home Reversion Scheme?
Open to UK homeowners aged 65 and over, a home reversion scheme is different from a lifetime mortgage. The provider purchases a percentage (or all) of your home (at less than market value) in exchange for a tax-free equity lump sum.
You then have the lifetime opportunity to live rent-free in your house for life, or until you go into permanent care.
When you pass away or move into long-term care, your home is sold, and the proceeds are used to pay the lender, after which the balance will be distributed among your beneficiaries.
But wait, there’s more!
If the value of your home increases by the time it’s sold, you (or your estate) will benefit from the appreciation in your share of the home.
Moreover, you’ll know the exact percentage of your home’s value that your beneficiaries will inherit after you pass on.
Learn more about: The Types of Equity Release Schemes
How Does Equity Release Get Repaid?
What is great about an equity release mortgage is that you are not obligated to make any repayments in your lifetime.
Should you wish to, you can pay some of the rolling interest, or portions of the loan, while you are still alive. This way, you will decrease the amount owed when you pass away or go into a care facility.
Equity release is usually paid off through the sale of the home. However, your family can use any additional funding sources they wish to.
It is essential to note that equity release is regulated, and reputable lenders will provide you with a scheme that has a ‘no negative equity guarantee’. This means that your estate will never owe more than the value of your property.
Check out more information on: How the Equity Release Council Safeguards Your Future
Do the Funds Released Need to be Used For a Particular Purpose?
The short answer is no!
You can use the equity released for any purpose you wish to. However, if you do have an existing mortgage, you will need to use some of the equity to pay that off first.
From there, the decision is all yours!
A lump sum of cash can be used to go on a dream holiday or secure your family’s inheritance. Smaller monthly payments are suitable if you are looking for a way to cover your living costs.
Need inspiration? Have a look at: The 12 MOST POPULAR Equity Release Uses
Where Will I Live With Equity Release?
With an equity release mortgage, you can continue living in your home until you pass away or move into a permanent care facility.
You can also consider using the cash to pay for an in-house career if you wish to stay in your cherished family home until you pass away.
We all know that life sometimes takes unexpected turns.
Do not worry!
If you decide to move home, for whatever reason, you can transfer your equity release, should your provider approve the new home.
It is crucial to speak to have your financial adviser look at your potential new property’s details to ensure that it meets the necessary criteria before making any commitments.
When Is One Eligible for Equity Release?
To be eligible for equity release, you need to meet the following criteria:
- You must be at least 55+. In some cases, the plan might require you to be 60 or 65.
- If there are 2 or more homeowners, the youngest needs to be at least 55.
- You need to own your home
- You should have no or only a small mortgage left on your property.
Worry no more! Why You Should Be at Ease With Equity Release
You DO Have Other Choices Besides Equity Release
If you’re not keen to release the equity from your home, there are alternative options to aid in unlocking a stress-free retirement. While these may take a little work, they could end up highly profitable in the long run.
Perhaps consider downsizing and pocketing the balance, renting out a room, or even investing in a business. We recommend that you get in touch with a financial adviser who can guide you on your retirement journey.
While financial advice can be costly, it WILL only provide benefits for you and your family in the long run!
Find out more about: Why Releasing Equity Is a Good Idea
How Does an Equity Release Calculator Work?
Are you wondering how much equity you can release from your home? If so, then use our free UK Equity Release Calculator to find out!
An equity release calculator works out the minimum and maximum amounts of equity that you can release, based on your age, and the value of your property.
The amount of cash tied up in your home is additionally calculated based on the state of your health. Finally, the older you are, the more equity you will be eligible to release.
Why Using an Equity Release Calculator Is a Must
They say that knowledge is power. Well, truer words were never spoken when it comes to releasing the equity tied into your home.
1 in 5 people who release equity regrets it. But, don’t be deterred. Our research confirms that those who feel remorse signing up for a plan did not do the proper research, get the right advice, or weren’t fully aware of what an equity release mortgage entails.
We’re here to help!
Trying our calculator is the 1st step on your journey to releasing cash stress-free. Find out exactly how much equity is tied into your home right now. It could change your life forever!
Find out more: When Should You Consider Switching Your Equity Release Plan?
Got Questions? Check These First
What Are the Pitfalls of Equity Release?
Like all financial products, equity release does have some pitfalls that you need to be aware of. However, there’s no need to be deterred. As long as you have the right knowledge, you’ll be able to release equity with peace of mind.
These pitfalls include:
- Compound interest
- Reduced inheritance
- Early repayment charges
What Is the Catch With Equity Release?
There’s absolutely no catch!
Equity release is a safely regulated financial product. With the right advice, careful planning, and selecting a lender who’s a member of the Equity Release Council, then your experience should be safe and stress-free.
Is Releasing Equity a Good Idea?
If you’ve done all your research, sought guidance from a financial adviser and looked at all the alternatives, then equity release is a great idea.
As a result of Covid-19, over 1 million UK citizens have had to postpone retirement. What’s niche about the market is that most homeowners in the UK are retirees, even those who are cash-strapped.
Therefore, you can use the equity tied into your home to unlock a stress-free retirement that you never thought possible.
Learn now: The Pros & Cons of Equity Release
How Much Interest Will I Pay on Equity Release?
The amount of interest you’ll pay is determined by a few factors, including:
- Your age
- The condition of your health
Average rates are between 3% and 4%, but you could achieve rates as low as 2.3%
While unlocking equity from your home might just be the perfect answer for you, it is essential to weigh up all the pros and cons and look at equity release alternatives before making your final decision.
If your pension and other businesses cannot help you maintain or improve your lifestyle, then equity release is an excellent option for you, and worth any risks involved. As long as you own your home and are over the age of 55, the chances are that there will be an equity release scheme available for you.
You won’t be limited to how you can use the money and will not have to worry about making repayments or losing your home.
Contact your financial adviser today to find the best equity release plan for you!
- HOUSING FINANCE AND MONETARY POLICY 2012 Journal of the European Economic Association Volume: 11, pp 101-122 DOI: 10.1111/J.1542-4774.2012.01095.X Alessandro Calza 1,Tommaso Monacelli 2,Livio Stracca 1. 12345
- Housing Finance and Monetary Policy 2009 Social Science Research Network Alessandro Calza 1,Tommaso Monacelli 2,Livio Stracca 1 1 European Central Bank ,2 Bocconi University 1
- Housing finance and monetary policy 2009 Research Papers in Economics Alessandro Calza 1,Tommaso Monacelli 2,Livio Stracca 1 1 European Central Bank ,2 Bocconi University 12
- 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 123
- Developing Equity Release Markets: Risk Analysis for Reverse Mortgages and Home Reversions 2013 Social Science Research Network DOI: 10.2139/SSRN.2198619 Daniel H. Alai 1,Hua Chen 2,Daniel Wanhee Cho 3,Katja Hanewald 3,Michael Sherris 3 1 University of Kent ,2 University of Hawaii at Manoa ,3 University of New South Wales 12
- 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 12134
- The Valuation of No-Negative Equity Guarantees and Equity Release Mortgages 2019 Social Science Research Network DOI: 10.2139/SSRN.3552238 Kevin Dowd 1,David P. Blake 2,Dean Buckner 3,John Fry 4 1 Durham University ,2 City University London ,3 The Eumaeus Project, UK,4 Manchester Metropolitan University1
- “Equity release records broken as unprecedented Q4 activity sees 2017 lending reach £3.06bn with annual growth at a 15-year high”. Equity Release Council. 23 January 2018. Retrieved 5 August 2018.1
- “Consultation Paper CP 13/18” (PDF). Bank of England. 2 July 2018. Retrieved 5 August 2018.1
- “Reverse Mortgages: Report to Congress” (PDF). Consumer Financial Protection Bureau. Retrieved 1 January 2014.1
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HOW MUCH EQUITY CAN YOU RELEASE?
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