Equity Release

What is Equity Release?

Equity release is a financial arrangement available in the United Kingdom that allows homeowners, typically those who are aged 55 or older, to access the equity tied up in their property. It provides a means for individuals to release a portion of the value of their home in the form of a tax-free lump sum or regular payments, while still retaining the right to live in the property.

The main types of equity release products in the UK are lifetime mortgages and home reversion plans. A lifetime mortgage involves taking out a loan secured against the property, with interest accruing over time.

The loan, along with the accumulated interest, is typically repaid when the homeowner passes away or moves into long-term care. Home reversion plans, on the other hand, involve selling a portion or all of the property to a provider in exchange for a lump sum or regular income. The homeowner can continue living in the property as a tenant without paying rent until they pass away or move into care.

Equity release is often considered by individuals who have substantial equity in their homes but have limited income or savings to support their retirement or meet specific financial needs. The released funds can be used for various purposes, such as supplementing retirement income, funding home improvements, paying off debts, or assisting family members with their financial requirements.

It is important to note that equity release is a significant financial decision with long-term implications.

Therefore, seeking independent financial advice is strongly recommended to understand the potential risks, costs, and impact on inheritance. Equity release schemes are regulated by the Financial Conduct Authority (FCA) to safeguard the interests of homeowners, ensuring transparency, consumer protection, and fair treatment throughout the process.

Equity release offers several potential benefits for eligible homeowners.
Some of the most common benefits include:

Access to Tax-Free Funds:

Equity release allows homeowners to access a portion of the equity tied up in their property as a tax-free lump sum or regular income.

This can provide individuals with a valuable source of funds to supplement their retirement income, meet immediate financial needs, or improve their quality of life.

Continued Homeownership:

One significant advantage of equity release is that homeowners can continue to live in their property for the rest of their lives.

This ensures they can enjoy the comfort and familiarity of their home while accessing the equity it holds.

No Monthly Repayments:

With lifetime mortgages, the most popular form of equity release, there are typically no monthly repayments required.

Instead, the loan and accumulated interest are repaid when the homeowner passes away or moves into long-term care.

This can provide financial relief for individuals who may have limited income or prefer not to make regular repayments.

Financial Flexibility:

Equity release allows individuals to use the released funds as they see fit.

Whether it’s paying off existing debts, covering healthcare expenses, funding home improvements, helping family members,

or enjoying a more comfortable retirement, homeowners can use the funds according to their specific needs and goals.

Some reasons people unlock Equity Release

Pay off an interest only mortgage?

Help your child or grandchild get a foot on the housing ladder?

Pay off other loans or credit card bills?

Pay for a new conservatory or kitchen?

Take that once in a lifetime holiday

Just increase your quality of life

It is important to note that equity release is a significant financial decision with long-term implications.

Therefore, seeking independent financial advice is strongly recommended to understand the potential risks, costs, and impact on inheritance. Equity release schemes are regulated by the Financial Conduct Authority (FCA) to safeguard the interests of homeowners, ensuring transparency, consumer protection, and fair treatment throughout the process.

‘A lifetime mortgage is a loan secured against your home. 

Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.’

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