Is equity release right for you?
9 November 2021
More equity released than ever before
Homeowners over 55 are releasing more equity than ever before, with the latest statistics showing that the average amount of equity released is up 25% on the previous year. This has highlighted the great range of products that are currently available and also a rise in the number of middle-class homeowners turning to equity release.
This rise in the popularity and accessibility of equity release might have caught your attention — or even left you wondering whether it might be the best path to help you realise some of your financial goals? Before you sit down with an adviser to explore the right plans for you, here’s all you’ll need to know about releasing equity.
What is equity release?
Equity release is one option available to homeowners over 55 looking to raise some funds. In the simplest terms, it works by allowing you to unlock some of the capital that you own in your property, letting you access the money (equity) of the property, without having to sell your home. Equity release is offered by well-known and respected financial institutions, meaning you’ll be in safe hands with regulated advisers you can trust.
The most popular type of equity release plan is a lifetime mortgage, where you retain 100% ownership of your house and can remain living there for as long as you please! The lender will only claim any outstanding balance or debt in the event of having to move into long term care, or passing away. There are hundreds of lifetime mortgage products on the market meaning that, if you seek guidance from an experienced adviser, you should always be able to find an option that’s best for your individual circumstances. For example, you may prefer to get your money in instalments — or pay off the interest as you go, to ensure the balance doesn’t rise. Lifetime mortgages are especially popular at the moment, with many people viewing them as preferable to a traditional mortgage.
The second type of equity release plan is a home reversion, in which you sell a part of your home to a specialist reversion company. You may not be entitled to the full value of your home, but you are able to live there rent free for the rest of your life.
Will I be eligible?
On the whole, most homeowners over 55 will be able to qualify for equity release. However, there can be certain barriers to releasing equity, which is one reason why it’s so important to work with an experienced adviser in the equity release sector. Some factors that the lender will take into consideration, are:
- The type of property you own. You’re less likely to be able to release equity if you own a certain type of home, e.g. a listed property. Each lender will have their own set of criteria, but our advisers are experts in knowing what will work best for you
- Whether you want to pay off the interest as you go. If you’ve got the ability to pay off the interest on your loan as you go, this can be an extremely appealing option as it will leave you with more to pass on to your loved ones. But not all lenders will accommodate this, so you’ll need to find an institution with this capacity
- How flexible you need your plan to be. Some plans will allow you to stop and restart the payments. This is a great option if you’re not certain about what your future might look like.
Why you need to work with a qualified adviser
With all these options and variables, it can seem like a lot to get your head around! Luckily, that’s where we come in. We’ve got a team of equity release specialists who are experts in helping people find the best plan for their lifestyle choices. While there are numerous price comparison sites for equity release, they do not have the multifunctionality required to truly take into consideration your unique circumstances — it’s important to seek advice from an experienced professional
Our founder and Managing Director, Jan Johnson, commented: “It’s great to see that so many people are realising how useful lifetime mortgages can be for those who need additional financial support to meet their goals later in life.”
“If you’re wondering whether equity release could be right for you, the best way is to work with an adviser, to make sure you can have trust and confidence with a plan that works for you and your family.”
If you want to learn more about how equity release might work for your individual situation, then please get in touch.