Not all equity release companies are created equally! Some stand out from the crowd.
If you’re looking to release equity in 2021, using a top scheme provider is crucial.
If not, you might end up receiving much less but paying significantly more. Every year, £1 billion goes to mortgage fraud, and if you’re not careful, you could be the next victim.
We’ll help you determine:
- How to know if an plan provider is top-notch.
- The best lifetime mortgage schemes operating in the UK.
- Who to turn to for a home reversion scheme.
After studying over 220 plans, looking at who’s regulated, and analysing what the top plans have in common, we’ve compiled this list of the best of 2021. Check it out!
What’s Equity Release?
Equity release plans are a type of financial product that allows older homeowners to release equity tied into their homes. Equity release providers will give you the option to unlock the cash in a lump sum, a drawdown facility, a combination of both, or through a monthly salary. The 2 main types of equity release are a lifetime mortgage and a home reversion scheme.
Discover more: What Is Equity Release?
How Does Equity Release Work?
Equity release schemes work by your home being collateral against your loan. Equity release providers will offer cash without any repayments being expected during the course of your life. Instead, the loan, plus compound interest1 is only repaid, usually from the sale of your home, when you die or enter long-term care.
Equity Release Types
As mentioned above there are 2 equity release options available to you, a lifetime mortgage and a home reversion scheme. Let’s take a look at each:
Lifetime mortgages are the most popular plans on the equity release market. These equity release mortgages allow you to unlock cash, while still retaining 100% ownership of the estate.
With a lifetime mortgage, you have the option to pay back the monthly interest and up to 10% of the loan anually, or you can allow it to compound and be repaid when you die or go to long-term care.
Full article: What’s a Lifetime Mortgage?
Home reversion schemes work by you selling part or all of your home to a home reversion provider in return for a lump sum or regular payments. You have the right to continue living in the property rent-free until you die, but you have to agree to maintain and insure it.
You’ll need to seek financial advice with a lifetime mortgage and a home reversion scheme.
More information: What’s a Home Reversion Scheme?
How Do I Find the Best Equity Release Deals?
To find the best deal on equity release, you must seek professional equity release advice. Look for a whole market financial adviser that specialises in equity release. They’ll analyse plans by all regulated2 lenders, finding the best deals available at the time, and what best suits your and your family’s needs.
Interesting read: Equity Release Companies to avoid in Jan 2022
How Did We Choose the Top Equity Release Companies?
We chose the best equity release companies by analysing all equity release plans by regulated providers. We looked at the equity release products they offer and their level of flexibility.
So, what do we consider the most essential aspects in finding the best equity release deal?
- Minimal early repayment charges.
- No early repayment charges if you move into a lower-value property.
- Penalty-free repayments if you live with your partner and one of you passes away or goes into care.
- Ease of transferring the loan to another property.
- Option to add or remove someone from your loan without a high fee.
- Fantastic specials or free features.
- A balance between low interest rates and excellent features.
Hopefully, one of these will cater to your needs. Try our FREE equity release calculator to determine how much money is tied into your estate right here!
Are All Equity Release Companies Members of the Equity Release Council?
No, not all equity release companies are members of the Equity Release Council. If you’re looking to release tax-free cash, never select a lender that isn’t a member of the Council. The Equity Release Council3 is a trade body that was established in 1991 to oversee the equity release industry. Their primary goal is to protect the consumer and ensure that the industry is corruption-free.
Full article: What is the Equity Release Council?
Which Is the Best Equity Release Company?
According to our detailed analysis, More2Life is currently the top equity release company in the industry. Beyond their excellent service, the main reason for this is that if you select the company for an equity release mortgage, its fixed early repayment charges reduce with time. This means that the longer you have a plan with them, the less you will pay on your early repayment charge if you decide to end it early.
Considering a cash lump sum through a More2Life equity release product? Contact a financial adviser who can guide you through the process.
The 8 Top Equity Release Plan Providers in Jan 2022
While all ERC members are worth your consideration, there are 8 providers that currently offer the best equity release plans on the market.
Here they are!
As one of the largest equity release firms in the UK, More2Life is all about innovation. The company was established in 2008 and continues to grow. They’re known for their low early repayment fees.
More2life offers 5 plan types. This wide variety is perfect for catering to your individual needs.
Learn more: More2Life Equity Release
Aviva Lifetime Mortgage
As one of the UK’s leading plan providers, Aviva has had more than 250,000 equity release customers since 2020. This equates to over £8 billion in equity.
Aviva has won multiple awards, including Best Equity Release Lender at 2020 What Mortgage Awards!
Learn more: Aviva Equity Release
Liverpool Victoria (LV=)
With more than 1 million equity release clients, Liverpool Victoria (LV) is one of the leading financial companies in the UK.
LV=, as you might know it, is a rare company that offers holiday home and second home lifetime mortgage plans. This is generally not seen in the UK.
Offering schemes since 2002, the company has won several awards. A recent accolade is a 5-star award for its Flexible Lifetime Mortgage.
Learn more: Live More Equity Release
Legal & General
Legal & General is one of the UK’s leading pension fund asset managers and equity release scheme providers.
It has won numerous awards, including Later Life Lender of the Year at the 2021 Mortgage Awards.
Legal & General gives you direct assistance with its whole-of-market advisers. These ‘Retirement Lending Advisers’ come at no additional cost and can provide you with guidance on the entire market.
Learn more: Legal & General Equity Release
Born through a merger, One Family was founded in 2015. It’s one of the largest mutual organisations in the UK.
The company has a fixed advice fee of £950, and its whole-of-market advisers are available to help you find the best equity release plan for you and your family.
One Family’s schemes come with fixed and variable interest rates. You can select from 9 different plan options.
Learn more: One Family Equity Release
Just Retirement and Partnership Assurance merged to form the financial solutions company Just.
The company was commended as one of the best service providers at the 2020 Investment Life and Pension Moneyfacts Awards.
Learn More: Just Equity Release
Nationwide Building Society
Nationwide is a relatively new player in the Equity Release market (November 2017), with 15 million members. It’s one of the country’s largest non-Lifetime Mortgage providers. You must be at least 55 to release equity with a Nationwide Lifetime Mortgage.
Learn more: Nationwide Equity Release
Bridgewater Equity Release
In 1998, the company Bridgewater Equity Release was established as a specialist equity release provider. It has won several accolades for its service since 2006, when it was chosen Best Home Reversion Provider for 9 years in a row.
You must be at least 65 to receive a Bridgewater Equity Release Lifetime Mortgage and your property must be valued at least £120,000. At least 25% of the home or £25,000, whichever is lower, must be sold before you may release cash with a Bridgewater Equity Release Lifetime Mortgage.
Lifetime Mortgages are available from Retirement Advantage, including fixed-term, interest-only and constant monthly payment options.
You must be 55 to 90 and reside in Great Britain to release equity through Retirement Advantage, and the home must be worth at least £100,000.
What are the Pros & Cons of Equity Release?
The biggest pro of equity release is that you have the opportunity to unlock tax-free cash. The biggest con of equity release is that the interest can compound quickly.
Here’s more details:
Equity Release Pros
It’s rapidly growing in popularity due to the number of benefits that it provides.
- Tax-free cash – Any money released with an equity release plan is tax-free and can be used for anything you want.
- No monthly repayments – No monthly repayments are required throughout the full term of the loan.
- You can stay in your home – you could be able to release the money that you need and remain living in the property.
- Fixed interest rates – The interest rate on most lifetime mortgage plans are fixed throughout the entire term of the loan.
Equity Release Cons
- Lower property equity – it will reduce the cash you have available in your property.
- Lower means tested benefits – You could be entitled to fewer means-tested benefits if you take out an equity release loan.
- Lower inheritance – you receive less for your house than you would if you sold it on the open market.
More Advantages & Disadvantages: What the Pros & Cons of Equity Release in Jan 2022 & Is it a Good Idea?
What Is the Maximum Loan to Value for Equity Release?
You might be wondering what the maximum loan-to-value (LTV) is that equity release products are designed to offer. In general, it’s between 60% and 70%. The average for most lenders is around 65%. This allows you some additional money on top of your own deposits in order to service your debts if need be.
Which Companies Offer Equity Release?
- Age Partnership
- Bath Building Society
- Buckinghamshire Building Society
- Canada Life
- Daily Mail
- Equity Release Club
- Equity Release Supermarket
- Equity Release Wise
- Go Compare
- Leeds Building Society
- Legal & General
- Liverpool Victoria
- Mansfield Building Society
- Money Saving Expert
- More 2 Life
- Mortgage Express
- New Life
- Newbury Building Society
- Northern Rock
- Norwich Union
- One Family
- Penrith Building Society
- Responsible Lending
- Retirement Bridge
- Scottish Building Society
- Scottish Widows
- Step Change
- Stone Haven
- Sun Life
- The Family Building Society
- Tipton & Coseley Building Society
- Vernon Building Society
- Yorkshire Bank
What are the Typical Interest Rates on an Equity Release Loan?
The typical interest rate is about 3.7% for a lifetime mortgage equity release plan, although some rates can be lower.
In the past, interest rates were generally higher compared to those on a standard mortgage, but these days, rates are more competitive. If you opt for an enhanced lifetime mortgage, you can achieve rates as low as 2.3%.
If you’re not paying off the debt every month, the interest continues to accrue.
Learn MORE About: Equity Release Interest Rates
How Much Does Equity Release Cost?
In addition to the interest rate charged, there are other fees involved in unlocking equity from your home. Depending on the companies you use, these might cost anywhere from £1,500 to £3,000 in total.
These costs include:
- Solicitor fees
- Arrangement fees
- Valuation fees
- Advice fees
DISCOVER: The Costs Involved in Equity Release
Are Equity Release Schemes Risky?
The Financial Conduct Authority (FCA) now controls equity release companies. This means you can claim compensation if you are sold an unsuitable product.
Equity release is an option for people who need money immediately and don’t have the time or resources to save up. However, it’s important that you do your research before making this choice so that you don’t end up signing up to a poor-value contract with high fees – especially as there are risks involved!
The type of plan you choose should depend on what will work best in terms of timing (i.e., you might prefer partial releases) while also being mindful about how much equity each plan covers.
Learn More: Is Equity Release Risky?
What are the Alternatives to Equity Release?
Although equity release could be the right option for you, it’s good to consider different alternatives too. Some of these are listed below:
- Selling assets to raise money.
- Downsizing to a smaller house which is cheaper to maintain than your current house. As well as saving on maintenance costs, you would also raise money through selling your current property.
- Remortgaging your current property or modifying the current mortgage. This could help you save money without having to borrow more.
- Changing your budget. This could stop you spending money without needing to.
- Using private pensions.
Learn More: What Are the Alternatives to Equity Release?
Releasing equity from your home is a major decision, and with so many top-notch lenders on the market, it can become overwhelming.
The best thing you can do is speak to your financial adviser, who will be able to narrow down which providers will suit you best. You can then shop around to discover the right equity release deal for you and your family.
Are you wondering how equity release fees work? Here’s the information you need.