What is equity release and could it work for me?
An equity release arrangement is a special type of mortgage that isn’t repaid until the homeowner passes away or moves into a long-term care facility. It is a common method for freeing up the equity in your home without having to move out or downsize.
With an equity release arrangement, the borrowing is secured against your home and allows you to release monthly income to help with the cost of living in retirement, or as a one-off tax-free payment. There are typically limits on the percentage of equity you can release depending on your age, so as you get older, you may be able to release more equity from your home.
You can also protect a percentage for your children and grandchildren so you leave some inheritance for them.
Who is eligible for equity release?
Equity release is typically only offered later in life, once you either own your property outright or own a significant percentage of it. Lenders will typically want to understand your financial circumstances before they make a lending decision. This could mean looking at your pension payments and any means-tested benefits you currently receive.
Lending is usually based on your age, rather than the value of your property.
This means the older you are, the more you will be able to borrow. From age 55, you should be able to access between 20-30% of the value of your property. As you get older, this could increase up to 60%. This can help those who reach later life and find themselves to be asset-rich but cash-poor. To unleash the value tied up in your home, speak to our team today. Whether you own your home entirely or you are still making mortgage payments, we can help you choose the right lending products for your needs.