Equity release is a way to release money by way of a loan secured on your home or through the sale of all or part of your home, subject to certain rights to remain in occupation.
This process gives you the option to take a variable cash sum which you might then reinvest to provide an income or use to pay for that luxury holiday, home improvements or alterations, or perhaps to provide additional retirement income.
The most popular scheme is known as a Lifetime Mortgage. In this case, interest charged by the mortgage lender can either be paid monthly or accumulated and added to the original equity you have released, the sum of which is only paid once your home is sold. You have the comfort of knowing that you can stay in your home until you either die or move into a long term care home.
You can usually raise any sum from as little as £10,000, although there is a general requirement that you are over 55 years of age and have equity in your home of £150,000 or more. Most mortgage lenders offer more the older you are.
This is largely dependent on the perceived likelihood of price corrections in certain areas which might make equity release loans more ‘risky’ to lenders. A home valued at £500,000 might, therefore, enable a homeowner to raise as much as £175,000 through equity release.
Most lifetime mortgages now come with a “no negative equity guarantee”, which means that you will never owe more than the value of your home. Furthermore, whilst your children will not ‘inherit your debt’, your estate will be liable to repay the lifetime mortgage (and accrued interest) upon your death. Therefore, your estate will be reduced.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
We look at why mortgage rates increased following the Bank of England's choice to reduce the bank rate, and should you fix now?
UK 2024 Autumn Budget: Housing
17 days ago
On 30th October 2024 the Chancellor, Rachel Reeves delivered the Autumn budget which we had previously been warned would be “difficult”. Below we have summarised the main housing points.
Talking about money with kids
24 days ago
In an increasingly cashless society, money is an intangible concept for children to grasp. In the days of coins and notes, kids could see money as something physical you require to purchase goods and services.
In order to help teach your children about money, we have listed some tips below;
Labour Autumn Budget Predictions: Housing
18 Oct 2024
The UK’s chancellor, Rachel Reeves will deliver the Labour government’s autumn budget at the end of the month, we take a look at what could be announced in relation to housing.
Recent research from Halifax has revealed the most sought-after locations for first time buyers in Britain.
The data which was taken from the Halifax House Price Index looked at areas outside of London where those looking to purchase their first property were buying. Despite high property prices and increased rates, these first time buyer hotspots have remained popular.
How can I look after my mental health?
7 Oct 2024
Taking care of your mental health means looking after your emotional, psychological, and social wellbeing. There are several ways we can practice self-care that will help to improve our physical and mental health. This can help to reduce our risk of illness, manage stress, and boost our energy levels!
First Time Buyer to do List
4 Oct 2024
Buying your first home is very exciting but it can also be very daunting which is why we have set out a “to do list” to help you get started.
Bank of England Holds Base Rate at 5%
20 Sep 2024
With UK inflation remaining at 2.2% which is slightly above the Bank of England’s 2% target, the decision was made on Thursday 19th September to keep the base rate at 5%.
More information
Trusted by
