EQUITY RELEASE
Equity Release
Equity release lets you unlock cash from the value of your home. The amount you can release depends on your age, how much your property is worth and how much you choose to borrow.
There are two different types of equity release:
- Lifetime mortgage
- Home reversion plan
We offer lifetime mortgages, but it’s important you understand the main differences:
Lifetime mortgage
You take out a mortgage against the value of your home. The loan, along with any interest, is normally repaid when you die or move into long-term care.
You always retain 100% ownership of your property and it will never be repossessed, provided you follow the terms and conditions of your mortgage.
Home reversion plan
A provider buys all or part of your home from you and you can remain in your house as a tenant for the rest of your life.
You normally lose ownership of your property to the reversion company, but some allow you to retain an interest.
We all want to enjoy a new lease of life in retirement, but having enough money to pay for bigger plans on top of everyday essentials can be tough. If you are looking for a way to fund your retirement dreams without having to move, you could consider releasing equity from your home.
What is a lifetime mortgage?
A lifetime mortgage is a loan secured against your home, it is a type of equity release. The loan, plus interest, doesn't have to be repaid until the last borrower dies, or moves out of the home into long-term care. There's no need to make monthly payments and you won't have to move. All lifetime mortgages approved by the Equity release council come with a "no negative equity guarantee", which means that your estate will never owe more than the property is sold for (subject to the product's terms and conditions). The interest rate you take out will be fixed for the lifetime of the loan and this cannot be changed.
Taking out a lifetime mortgage is a big decision, so to ensure you understand all the features and benefits, you wont be able to take a lifetime mortgage without financial advice.
Is a lifetime mortgage right for me?
There are many reasons why you may consider releasing equity from your home with a lifetime mortgage. You may want to take a trip of a lifetime, make some much needed home improvements or repay outstanding debts
However you wish to spend the money, it’s important to remember that a lifetime mortgage could impact your entitlement to any means tested state benefits.
It will also reduce any inheritance you may wish to leave behind, so it is important to discuss this option with your family before you make a decision.
There may be cheaper ways for you to borrow month. Any existing savings and investments should be taken into account before considering a lifetime mortgage.
Am I Eligible?
To be considered for a lifetime mortgage, a loan secured against your home, you need to:
- Usually be aged 55+
- Own a property worth more than £70,000
- Living in England, Wales or mainland Scotland.
- Own your own home with a small/no mortgage.
The actual amount will be determined by your age and property value.
Eligibility
Why do people take a lifetime mortgage?
- To make home improvements
- Repay an interest-only mortgage or other debts
- Help a loved one onto the property ladder
- To pay for a family holiday
- To enjoy a more financially comfortable retirement
Other Important information
Interest is added to the loan amount each month. The interest is compounded, which means that the amount you owe will grow over time.
If you gift the money away, the recipient may have to pay capital gains tax in the future.
If you are considering repaying debts, you should think carefully before securing debts against your home.
Arrangement fees apply.
What is an income lifetime mortgage?
We all want to make the most of our time during retirement, but whether you enjoy dining out with friends, keeping fit or even treating the grandchildren, life’s little luxuries can add up. Your home could provide you with an extra source of income to help you maintain your standard of living and do more of the things you love.
An income lifetime mortgage is a new way to release equity. It’s a loan secured against your home that allows you to release a regular monthly income for 10, 15, 20 or 25 years. There is no need to make monthly payments and you won’t have to move.
The interest rate, amount you will receive and the length of time you will receive it for are fixed from the start and can’t change, meaning you will know exactly what you’re getting each month. Of course, income can be stopped at any time with no fee (although once stopped it cannot be restarted).
Another important note is that the no negative equity guarantee means you or your estate will never owe more than the property is sold for (subject to terms and conditions).
What if I already have other retirement products?
Even if you receive your State Pension, an annuity or you’re using a drawdown, this product can work along side them to provide you with additional monthly income in retirement.
And if you are looking to retire a little early or bridge an income gap while you work part time, the product is designed to help here too.
Am I eligible?
A lifetime loan is secured against your home and is for those who:
- Are aged 55+
- Live in and own their own home with a small/no mortgage
- Want to top up their income by £200 or more a month
- Want a minimum initial loan of £2,500 at the outset
- Own a home worth £100,000+
- Live in England, Wales or mainland Scotland
Other Important information
The loan is only repaid when the last surviving borrower dies or moves out of their home into long-term care.
Inflation may reduce the spending power of your money over time.
At the end of the income term the income will stop and interest will continue to roll up until the loan is repaid.
Interest is added to the amount you owe each month. The amount owed will increase quickly over time, reducing the equity left in the house and any potential inheritance you have.
May affect means-tested benefits and the size of your estate.
You may have cheaper ways to borrow.
Arrangement fees apply.
