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, retained into the future. It gives you 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 lender is accumulated and added to the original equity you have released, the sum of which is only repaid once your home is sold.
The alternate method of equity release is known as a Home Reversion Scheme. In this case, you essentially sell all or part of your home at an agreed, discounted value, but retain a right to live in it for a period of time, usually the remainder of your life.
Any time you consider raising money against your home it’s worth making sure that you have a plan. Perhaps you are investing in your children’s further education, or you want to add value by making some much needed home improvements. Perhaps you intend to extend your property, rather than move or you have more expensive historic debts that you would like to consolidate at a cheaper and more sustainable rate of interest.
Releasing equity can be a sensible way of better utilising what might otherwise be ‘dead money’ tied up in your home but it can be a complex process and given that you are talking about what is likely to be your largest asset and the place you and your family sleep at night!
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 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.
Releasing the equity locked up in your home could be the key to a more comfortable retirement.
Is equity release a good idea? The simple answer is that it depends on your personal circumstances; all the more reason why you should take professional advice before you make a decision.
For more information or speak to an Equity Release mortgage adviser call us on 01628 507477.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
According to the Office for National Statistics, last year (ending March 2024), there were 153,800 new homes completed in the UK. To help the housing crisis, the UK government has pledged to build 1.5 million new homes in the next five years.
Check out some of the reasons why a new-build home might be for you.
Many households are still being affected by the high cost of living, with several people worrying about how they can make ends meet on a monthly-basis. Unfortunately, the cost of bills including, water, council tax, and energy are still rising. Here are some things you can do.
The Renters’ Rights Bill represents a significant milestone designed to enhance the rights and protections of tenants in the rental market. This comprehensive bill aims to foster a more balanced and fair rental sector, ensuring that tenants can enjoy greater security and equitable treatment. It is likely to become law in late 2025.
Limited Company vs Single Name Buy to Let
21 days ago
Owning a buy-to-let property in your sole name versus through a limited company each has its own set of advantages and disadvantages.
Top 10 property price hotspots in 2024
27 days ago
Data from Rightmove shows that Sunbury-on-Thames in Surrey was the number one house price hotspot in 2024. The prices in this area climbed an impressive 12.5% - increasing from an average price of £527,005 in 2023 to £592,926 in 2024.
Buy to Let Stamp Duty Changes April 2025
29 Jan 2025
On the 31st October 2024 stamp duty for those purchasing additional properties increased by 2% from 3% to 5%.
From 1st April 2025 the threshold will be reducing from £250,000 to £125,000
Where did Londoners move to in 2024?
24 Jan 2025
Research from Metro shows that those who chose to move home didn’t actually move that far away. With a 430g pack of chicken costing on average almost double in London than the rest of the UK, it's no wonder some people are choosing a change of scenery to save a few pennies.
Reasons to get a Buy to Let Mortgage
20 Jan 2025
Following recent changes in the Buy to Let market, some investors may find this product less appealing. However, if done correctly, building a buy to let portfolio can be very profitable.
More information
Trusted by
