Equity Release Facts

10 Facts About Equity Release in the UK That You MUST Know

We're Laying Everything Out With These 10 Facts About Equity Release to Ensure You're Aware of All You Need to Know & Be Set for an Amazing Future.

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Laying Out All The Equity Release Facts

These 10 equity release facts are a must-know before you release value from your home or property! We’re laying everything out on the table to make sure you know all you need to know and to make sure you’re all set for an amazing future.

Should You Take Out an Equity Release Plan?

The question you need to ask yourself is this: am I struggling to find extra cash? Another good question is: how old am I?

If you’re older than 55 and you’re struggling to get some needed money, then equity release is a good option for you. You might also be considering equity release as a means to a more comfortable or luxurious retirement. However, as with anything in life, it’s always good to view the full scope of things before making rash decisions.

Simply put…

Equity release is the answer for you!. It’s a very popular financial plan that allows you, if you own a home, to unlock funds that are tied up in your home, yet still allows you to live in your home at the same time.

If you haven’t heard about this type of financial plan, listen up. Here’s everything you need to know about equity release:

It’s Impossible to Pass On Your Debt

#1. It’s Impossible to Pass On Your Debt

Equity release is very popular because your heirs or family won’t inherit the debt when you die. You won’t have to worry about putting a burden on them when you’re gone.

Better yet, even if your home value depreciates to cater to mortgage expenses, the remaining loan will be canceled. For the most part, there’s always going to be a guarantee for negative equity.

What does this mean for you?

Well, don’t worry about a thing! Your retirement can be stress-free. Apply today for equity release and see your dreams come true.

Advice Before You Take Out a Plan

#2. Get Financial & Legal Advice Before You Take Out a Plan

The Equity Release Council and Financial Services Authority require you to ask for a professional’s help, advice, and services. Their rules stipulate that you need to do this even before you take out a plan. A professional financial advisor will help you through all the required processes effortlessly and they’ll also assist in the valuation of your property.

Better yet…

They’ll also help you know about the different charges you might need to pay in the process and they’ll inform you of the early repayment charges. They can also show you other alternatives to suit your needs: like downsizing or using different assets to gain more money.

Now:

A financial advisor, or a solicitor, will help you with your legal needs when it comes to equity release. The solicitor will walk you through all your legal rights after you’ve claimed equity release. Always remember, however, to ask a professional for advice and not someone who knows a little about equity release. Rather, ask persons from approved companies like those approved by the ERC 1and FCA2.

Guidelines When Moving Homes

#3. There Are Certain Guidelines When Moving Homes

You are looking at moving house but unsure whether it’s wise or not since you already took out your equity release. Well, this can be one of the biggest fears of anyone who owns a home and has an equity release. But wait, it shouldn’t be such a big fear at all!

How on earth can that be?

Well, it’s simple. You can always move homes whenever you want. The only requirement for you is to meet all contractual requirements your equity plan provider has.

Simply put…

Before you start house-hunting, just make sure you know what your provider’s needs are regarding that. That way, you’ll surely get value for your money.

Flexible With No Repayments

#4. It’s Flexible With No Repayments

Equity release differs from traditional mortgages. With equity release plans, you can continue living in your house until the day you pass away or when you have to move into residential or special medical care. When that happens, your loan will be paid off with the money from your old house.

Let me tell you this:

There are certain equity release plans, as with the voluntary repayment plan, that allows you to pay equity release early.

Fixed Interest Rates

#5. Fixed Interest Rates

Since 2015, equity release interest rates have decreased immensely – and that low-interest rate can be constant for life.

Best of all:

How much interest you pay when your plan comes to an end will depend on the length and type of your scheme or equity release plan. It’s vital that you remember – equity release plans end when you pass away or move into old-age care.

Now:

When it comes to a limited lifetime mortgage plan, and you don’t make monthly settlements, your interests will increase quickly. All interest you owe will be added to your overall loan amount annually. From that time onwards, it’ll grow.

What does this mean for you?

You absolutely need to remember to choose an equity release plan that has a “no negative equitypromise. Why? Well, it ensures that you and your family don’t owe more than the value of your property.

Look for Any State Benefits

#6. Look for Any State Benefits

Ever wondered about means-tested benefits? Well, equity release plans sometimes affect your eligibility for these means-tested benefits. So, if you receive means-tested benefits, money in your bank account can affect them. Therefore, it’s wise to check with your plan provider before you proceed with equity release applications or considerations.

Listen to this:

If you withdraw cash from your property, there’ll be less money remaining later on when you want to leave the inheritance in your will for your family or children. So, it’s essential to find a balance between what money you want now versus what you’ll want to leave for the future and your family or children.

Wonderfully Regulated

#7. It’s Wonderfully Regulated

You’ve probably heard of the FCA, otherwise known as the Financial Authority. Well, they govern lenders and financial advisers. However, the financial products also give you some assurance.

Better yet:

It’s according to law regulation that every equity release plan provider needs to sign up as a member of the ERC, or the Equity Release Council. Every provider also must abide by the ERC’s rules, codes, and principles.

As if that’s not enough.

There’s also a must-have ‘no negative equity guarantee. It makes for you to owe more than your house’s value. You are also allowed to transfer your plan to another house if you’ve sold your initial house, without any penalties, thanks to this ‘no negative equity guarantee.

Tax-Free Cash

#8. Tax-Free Cash

If you take out equity release, you won’t have to worry about being taxed for it. That means tax-free cash! If you’re dreaming about home renovations and improvements, going on a travel adventure around the world, or helping your children out, it’s your choice.

Eligibility Checks

#9. Eligibility Checks

You’ll need to meet certain requirements in order to qualify for a plan. These requirements are:

  1. UK residency. However, some plan providers can enforce localised rules of their own, such as encompassing UK extremes within their remit.
  2. Property valued £70,000 minimum. Theoretically, there’s no maximum property valuation limit. However, there are providers that can enforce a maximum amount to decrease their risk.
  3. You have to be minimum 55 years old. But, some plan providers have a minimum age of 60 and older.
Value Amount

#10. Value Amount

One question that’s very popular has to do with your property’s valued amount. Most people would like to find out what their property will be valued at, or how much equity release they’re eligible for. Well, it depends on your provider. Most equity release plan providers offer £10,000 minimum and £100,000 for others.

Your age will also determine the maximum amount that you can borrow or take out of your property. Other determining factors include health, lifestyle, and the property’s market value. Also, if you’re older, you can release more equity.

Common Questions

What's Equity Release and How Does It Work?

How Long Does The Equity Release Process Take?

What Are The Pitfalls Of Equity Release?

Can I Be Refused Equity Release?

In Conclusion

So, after all that information, you should be all set and ready for action. Without having any stress hanging over your head. Equity release is such an excellent financial plan, as you’ve probably seen.

However, before making your final decision, ensure that you consider the pros and cons of the equity release plan, the effect it’ll have on your life, and also consider other alternatives to borrowing money that is available out there.

Equity release has never been so popular! Thanks to these facts, you’ll be able to make an informed decision for your future, and the future of your family. If you’re still unsure, use the equity release calculator to work out your estimated equity release possibilities. It’s as simple as that.

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Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.
  1. Developing Equity Release Markets: Risk Analysis for Reverse Mortgages and Home Reversions
    2014 The North American Actuarial Journal Volume: 18, Issue: 1, pp 217-241 DOI: 10.1080/10920277.2014.882252
    Daniel H. Alai 1,Hua Chen 2,Daniel Cho 3,Katja Hanewald 1,Michael Sherris 1
    1 University of New South Wales ,2 Temple University ,3 Suncorp Life, Sydney, Australia 123
  2. The Valuation of No-Negative Equity Guarantees and Equity Release Mortgages
    2019 Economics Letters Volume: 184, pp 108669 DOI: 10.1016/J.ECONLET.2019.108669
    K. Dowd 1,D. Blake 2,D. Buckner 3,J. Fry 4
    1 Durham University ,2 University of London ,3 The Eumaeus Project, UK,4 University of Bradford 1234
  3. Reverse Mortgages and Linked Securities: The Complete Guide to Risk, Pricing, and Regulation
    2010
    Vishaal B. Bhuyan 12
  4. Asset-based Welfare, Equity Release and the Meaning of the Owned Home
    2015 Housing Studies Volume: 30, Issue: 3, pp 392-412 DOI: 10.1080/02673037.2014.963523
    Lorna Fox O’mahony ,Louise Overton
    University of Essex 1234
  5. Pricing and Risk Capital in the Equity Release Market
    2008 British Actuarial Journal Volume: 14, Issue: 1, pp 41-91 DOI: 10.1017/S1357321700001628
    G. M. Hosty 1,S. J. Groves 2,C. A. Murray ,M. Shah
    1 Partnership Assurance, Sackville House, 143-149 Fenchurch Street, London EC3M 6BN, U.K. Tel: +44(0)7712789154,2 Email: ged.hosty@partnership.co.uk 123
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Jason Stubbs Is a Specialist in the Equity Release Sector. He Enjoys Helping Older People Who Are Struggling Financially Get Out From Under Financial Pressure.

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Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
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She writes on the topics of equity release, home reversion, and mortgages.

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Nicola is a financial writer for EveryInvestor and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.