What’s the Equity Release Criteria and Do You Qualify?

What’s the Equity Release Criteria to Access Property Wealth? Learn About the Minimum and Maximum Loan Amounts and How to Know if You Qualify for Equity Release. Discover More Here.
  • Last Updated: 30 Jan 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui

Key Takeaways

  • The minimum age for equity release in the UK is generally 55 years old.
  • Basic criteria for equity release in the UK typically include being over 55, owning a property of a certain value, and the property being in good condition.
  • You can qualify even if you have an outstanding mortgage, but the loan will first be used to pay off the mortgage.
  • Residential properties, including detached, semi-detached, and terraced houses as well as flats, are typically eligible in the UK.
  • Your income does not typically affect your eligibility in the UK, as the amount you can release is primarily based on the value of your property and your age.

Without knowledge of the equity release criteria in 2024, you may miss out on the chance to unlock tax-free cash for your retirement.

Whilst some lenders' criteria may differ, there are some universal eligibility factors that typically apply to all.

In This Article, You Will Discover:

    Our team of leading experts has searched the market for the most accurate and up-to-date equity release information to empower you.

    We have mapped out what you need to know about the equity release criteria. 

    Therefore:

    What Does 'Releasing Home Equity' Mean?

    Releasing home equity lets homeowners over 55 convert part of their home's value into cash, without needing to sell.

    It's a way to tap into your home equity, offering either a lump sum or a regular income stream.

    This financial tool comes in two main forms: lifetime mortgages and home reversion plans.

    Each has its nuances, enabling homeowners to choose an option that aligns with their needs, be it for lifestyle enhancements, debt consolidation, or as a financial safety net in retirement.

    What Are the Eligibility Criteria for Equity Release in the UK?

    To qualify for equity release in the UK, there are several crucial eligibility criteria you need to meet.

    Firstly, you should be aged 55 or over. Next, the property you're releasing equity from must be your primary residence, located in the UK, and be worth at least £70,000.

    Lastly, your property should be free from, or have a low level of, any outstanding mortgage.

    In addition to these, some equity release providers may also impose additional eligibility criteria.

    For example, they might assess your health and lifestyle when deciding how much equity you can release.

    It's also common for providers to consider the type and condition of your property.

    Remember, it's always wise to seek independent financial advice before entering an equity release scheme.

    We understand these complexities and can guide you through the process.

    What Is the Main Personal Equity Release Criteria?

    The main equity release criteria are that the youngest homeowner must be 55 years or older. Additionally, there must be no more than two people on the property deed.

    Your property must also be situated in the UK. It is important to note that equity release is not available in the Republic of Ireland.

    The following should also be taken into consideration when applying for any equity release products.

    What Are the Age Limits for Equity Release?

    The minimum age to apply for equity release is 55.

    For joint equity release mortgages, this applies to the youngest applicant. 

    How Much Equity Do You Want to Release?

    The amount of equity you want to release will help you determine if equity release is the right option for you.

    Keep in mind that the maximum percentage of equity you can release from your home is usually 60% - 65% of the property value.

    Will Your Health Affect Your Eligibility to Obtain Equity Release?

    No, your health will not affect your eligibility for equity release. 

    In fact, it can be used as a positive.

    Health conditions may increase the maximum LTV3 available and result in minimal interest rates if you opt for an enhanced lifetime mortgage.

    What Are the Equity Release Property Criteria?

    Equity release property criteria include ownership and use of the property, it's location, and it's condition.

    More information:

    Ownership and Use of the Property

    If you opt for a lifetime mortgage on your property, you have the right to stay in your home until you move into long-term care1 or pass away.

    However:

    With a home reversion plan, you can sell all or part of your home while you continue to live there rent-free.

    Equity Release on a Jointly Owned Property

    Equity release on a jointly owned property is possible if there are only two homeowners on the property title deed.

    This way:

    You and your partner can remain living on the property until you both pass away or move to long-term care.

    Equity Release With a Mortgage

    You can obtain equity release with a mortgage, but you must settle it, as you are not permitted to have two loans on the same property.

    You can do so either with your savings or with the equity release funds received.

    Thereafter, you can spend the money in any legal manner you wish, with your financial adviser or broker's guidance.

    Where Is the Property Located?

    The location of your property is something lenders consider.

    If you live in mainland England, Wales or Scotland, you have access to all the equity release plans available, but other criteria may impact your eligibility. 

    Some lenders exclude islands.

    For example, you can not obtain equity release in the Isle of Man.

    How Much Is the Property Worth?

    The minimum property value for equity release plans is betweeen £70,000 and £75,000.

    If your property is worth more than £1mln, additional underwriting checks2 may be required.

    The Condition of the Property

    The condition of your property will also be taken into consideration before providers agree to lend you money.

    They will look closely at your property's condition and saleability, so it must be maintained to an acceptable standard.

    Can I Rent Out My House With Equity Release

    No, you can not rent out your house with equity release.

    Important Note: Rules for tenants or lodgers differ.

    You can have lodgers, although there could be a cap on how many.

    But, you may not have tenants living on your property with equity release.

    Can You Obtain Equity Release on a Leasehold Property?

    You can obtain equity release on a leasehold property.

    However:

    Lenders will have varied criteria when it comes to the remaining 'term' of your lease.

    Can You Obtain Equity Release on a Freehold Flat?

    Yes, you obtain equity release on a freehold flat if you also own the leasehold.

    If there is no lease in place, you can construct the leasehold title during the equity release process.

    Common Questions

    What Is the Minimum Age for Equity Release in the UK?

    What Are the Basic Criteria for Equity Release in the UK?

    Can I Qualify for Equity Release If I Have an Outstanding Mortgage?

    What Property Types Are Eligible for Equity Release?

    Does My Income Affect My Eligibility for Equity Release?

    How Do I Discover if I Qualify for Equity Release?

    Is There a Minimum and Maximum Loan Amount?

    Can I Be Refused Equity Release?

    How Ethical Is Equity Release in the UK?

    What Happens to My Equity Release Plan if I Go Into Long-Term Care?

    How Does Death Affect Equity Release?

    Why is Lasting Power of Attorney Crucial To Equity Release?

    Can Equity Release be Repaid?

    How Does Inheritance Protection with Equity Release Work in the UK?

    Which Documents Are Needed For Equity Release?

    Can You Get Equity Release With Bad Credit?

    What Is the Impact of Title Deeds on Equity Release?

    In Conclusion

    Whatever your reasons for wanting to release equity, it is important to obtain a better understanding of the market and the options available to you.

    If you have made your decision and are confident that you meet the equity release criteria, talk to an equity release professional to find out how much equity you may receive from your house.

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