equity release

What is Equity Release?

In the UK, equity release has become an increasingly popular financial solution for home owners aged 55 and older who wish to access the value tied up in their house. It allows homeowners to release a portion of the equity accumulated in their property as either a lump sum or in smaller instalments, providing them with a much-needed injection of funds to support their retirement or fulfil other financial goals. It offers a flexible and tax-efficient way to access the wealth stored in one’s property without the need to sell or move out. With the right equity release plan, individuals can enjoy the benefits of their hard-earned home while still retaining the right to live in it.

Why Choose Equity Release?

People choose to use an equity scheme because of the benefits it brings over some of the other options on the market. Most people are averse to selling their homes once they no longer need the space or have decided to retire from work. Equity schemes give you the money, or part of the money, you would get by downsizing or choosing a cheaper location and allowing you to use it straight away. The chance to keep ownership of your home without repayments and to have the extra income or cash is very appealing. At the Mortgage Advice Center you can get advice on releasing the equity in your home and also get a better understanding of what sort of schemes are available throughout the UK.

The money you receive can be used for home improvements, holidays, debt repayment or even helping your children to get onto the property ladder themselves.

equity release
lifetime retirement mortgage

What age do you have to be?

These kinds of mortgages are open to people aged 55 or over, although for some schemes the minimum age limit increases to 60.  

The Equity release market is now a mainstream market and is a popular way of people aged 55 or over accessing capital that is stuck in their homes.

As house prices have increased, people living longer and people requiring more income / capital Equity release has become more popular.  On releasing the equity there is interest charged that is either rolled up onto the mortgage balance so you don’t have to pay monthly payments or you can opt to pay monthly payments on some contracts to pay off the interest or more.

The Types of Equity Release

When it comes to equity release, there are two main types to choose from. First up, we have the lifetime mortgage. It’s like taking out a loan against your home, but with a twist! You get to keep living in your house, and the money you release can help fund your dreams. Second, we have the home reversion plan. Think of it as selling a portion of your property to a friendly investor while still getting to enjoy your home sweet home. They won’t move in or redecorate; they just want to share in the future sale proceeds. So, whether you prefer the loan-like vibe of a lifetime mortgage or the sharing-is-caring approach of a home reversion plan, there’s an equity release option that can help you unlock the value in your home while staying put.

Lifetime mortgage

The Advantages of Equity Release

It deffinitely has some perks! You can keep owning your home while getting a chunk of tax-free cash or regular income. It’s like having your cake and eating it too! But don’t forget the fine print. You have to think about how it might affect your inheritance plans, your eligibility for those means-tested benefits, and the long-term costs like interest and fees. It’s all about knowing the good stuff and the potential quirks so you can make a smart choice. Get in touch with our Experts today and we can help you decide if Equity Release is right for you.


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