Equity Release | You could raise immediate TAX-FREE cash with the option of no monthly payments, allowing you to:
Equity release is available in two types: Lifetime Mortgages and Home Reversion Plans. Both are authorised and regulated by the Financial Conduct Authority (FCA) to protect consumers. These options allow homeowners to access value from their home as a lump sum or in smaller withdrawals over time, while remaining in the property.
For many individuals, equity release can help support retirement income planning. Plans that follow the Equity Release Council’s standards include essential safeguards for consumers. These protections enable thousands of homeowners to use their property wealth without needing to make monthly repayments.
It is essential to consider all available alternatives before deciding. Weigh up both the benefits and risks to ensure the choice matches your personal situation and long-term financial goals. Speak to a qualified financial adviser who can explain the process clearly, including any impact on means-tested benefits or tax liabilities. While equity release usually does not affect income tax or most state benefits, your specific circumstances might result in exceptions.
Selecting a suitable plan requires thorough comparison of what is available. Today’s equity release market includes a broad selection of products designed for different financial needs. Whether you require a one-off sum or more flexible access, there is likely a plan that fits your objectives.
For expert advice, contact one of our specialist advisers today.
Equity release plans provide access to funds, known as ‘equity’, which are held within the value of your property. These plans are available to homeowners aged 55 or over who wish to access cash for retirement or future care needs.
Equity release functions in a similar way to a mortgage. It allows you to receive a lump sum or regular payments. The amount you can borrow is based on a percentage of your home’s value, and interest is charged on this amount. You retain the right to live in your property while the loan and interest build up over time.
When you pass away or move into long-term care, the property is sold and the loan is repaid using the sale proceeds. Equity release may benefit those who do not have cash savings but need access to money for later life planning. It is important to consider your long-term needs, family circumstances, and the effect on your estate before proceeding.
You must receive regulated advice to ensure the plan is suitable and meets current UK financial requirements.
You can use the cash for nearly any purpose. The most common uses include:
Boost Your Pension Income – If your pension doesn’t provide enough, this is an excellent way to supplement it.
A Memorable Holiday – Treat yourself and your family to a holiday that creates lifelong memories.
Cover Long-Term Care Costs – Long-term care can be expensive, and accessing your home’s equity could help cover these expenses.
Adapt Your Home for Comfort – If you plan to receive care at home, adjustments may be necessary. You might need to improve accessibility, such as installing a stairlift or modifying the bathroom. These changes allow you to stay in your home rather than moving to a care facility.
“..Mr and Mrs M, in their early 70s, had an interest-only mortgage with a term coming to an end. They had limited income from pensions and wished to remain in the current family home. We were able to find a provider that was prepared to lend just under 50% of the property value, which released enough funding to repay the existing mortgage loan as well as repay some personal debt. This reduced monthly outgoings for Mr and Mrs M by nearly £1,600 per month and meant that they were able to stay in their current home..’’
You will retain full or partial ownership of your property. This means you can continue living there indefinitely while keeping some equity available for future use.
You decide how to use the funds released from your home. Popular choices include covering care costs, helping family, reinvesting, or making essential home improvements.
This feature ensures you will never owe more than the value of your home, even if property prices fall sharply.
Some lenders allow you to ringfence part of your home’s value to leave as an inheritance. You may also make partial repayments early, subject to conditions, if your financial situation changes.
Most equity release plans do not require monthly repayments. This makes them suitable for those on fixed retirement incomes. The loan and any interest are usually repaid when the home is sold after death or entry into long-term care.
Many plans approved by the Equity Release Council allow you to transfer the loan to a new property. This applies if the new home meets your lender’s requirements and lets you move or downsize without repaying the loan early.
Reduced Inheritance
An equity release plan often means leaving less for your beneficiaries. You may no longer pass on your property. This is a common consideration for those seeking urgent care funding or later-life financial support.
Lenders usually value your property below its full market price when offering equity release. This could limit how much you receive. Selling the property may provide more funds, but you would lose the right to remain in your home.
Equity release could affect your eligibility for certain state benefits or alter your tax status. It is vital to get regulated advice before applying. Understanding how it may influence your financial position is key.
Interest builds over time and can significantly reduce your estate’s value. Rates may be fixed or variable, depending on the lender. Always compare providers to find terms that suit your long-term plans.
Plans may be restrictive if your needs change in future. Accessing more funds later or moving into care could be difficult. Spending funds earlier than expected may leave you short later in life.
As the cost of long-term care becomes a concern for many families, it’s crucial to consider the range of funding choices available. When money is tied up in assets and difficult to access, this often increases the stress surrounding future care planning. Equity release has become a common option for individuals and couples preparing financially for later life and potential care needs.
This approach allows homeowners aged 55 and over to release tax-free funds from their property without needing to move. It can support care costs at home or in a residential setting, depending on the specific needs and preferences of the individual. Before proceeding, it’s vital to understand how equity release could affect inheritance, benefits, and future financial planning.
The Financial Conduct Authority regulates equity release in the UK, and all advice must comply with strict lending guidelines. It is a legal requirement for applicants to receive regulated advice from a qualified adviser before taking out an equity release plan. Homeowners must also consider how interest builds over time and the impact it may have on the remaining equity in their property.
Equity release is not the right choice for everyone, so speaking to a professional is essential for assessing suitability. If you’d like, I can optimise this further for a specific location, type of care, or search term. Would you like help with that?
It is an alluring option for couples and individuals thinking about supporting care later on or in the present moment since it is flexible and requires little disturbance or change.
Equity release plans empower the homeowner (s) to stay at home, appreciating the same quality of life, without compromising in the short term.
It provides immediate access to funds, which you are free to use however you wish. This suits people who need long-term care but prefer to remain in their own home. It allows them to stay in familiar surroundings while covering care costs or essential home improvements.
This could include changes such as a stairlift, walk-in shower, or other modifications for safety and comfort. It may also benefit couples if one person needs to move into residential care. The person needing care can access the support required, while their spouse remains in the property. This ensures that both individuals have their needs met without selling the home.
In the event that a conventional equity release plan isn’t a possibility for you, you may consider remortgaging to take out equity from your property. This is an option to consider when taking a look at paying for care.
If you are looking to remortgage to release equity in your home, this will include taking out another, bigger home loan to cover the remaining balance on your property and release a fixed sum for you to utilize anyway you wish.
Remortgaging can be complex, and ought to be led under the direction of a financial professional who can act with your best intentions at heart.
Equity release products are specifically intended for older homeowners, so you must be at least 55 years old to apply. This age rule reflects how these plans work, often without monthly repayments and with the loan repaid later. Repayment usually happens when you pass away or move permanently into long-term care.
If you are younger than 55 and want to release money from your home, other options may suit you better. These include standard remortgages or secured loans, depending on your personal and financial circumstances. Lenders will also assess your eligibility in line with UK financial regulations and responsible lending criteria.
The mortgage interest rate that you will get will normally rely upon the measure of loan to value (LTV) you are taking.
In any case, ordinarily you would see rates beginning around 3% going up to about 7%. As should be obvious, the scope of lifetime mortgage rates that you can get is wide. That is the reason we emphatically prescribe that you address Connect Lifetime Mortgages to help you locate the most competitive rate.
They won’t have the option to change the principles and force you to repay the advance any sooner than was initially agreed.
If you do take the loan and decide that you want to repay it before either the homeowner dies or moves into long term care, then it is possible that early repayment charges apply. However, it is possible to get mortgages at the outset that allow early repayment.
If you are in receipt of government benefits, at that point it is conceivable that any means-tested benefits you get may be affected. You can book a call with an advisor to explain what it might mean for you.
Equity release plans do not suit everyone. Carefully review all your options and obtain impartial financial advice before deciding.
Only proceed with equity release if the product meets your financial and personal needs over the long term.
If you repay your lifetime mortgage early, you might face a substantial early repayment charge. Seek advice from a qualified adviser who can assess your situation and recommend a suitable plan. Ask for a personalised illustration to understand all the features, costs, and risks involved with the product.