Freephone: 0330 058 1579

Equity Release Help Centre

The advice that you will receive about releasing equity will differ depending on where you go for your advice, as well as the current situation you are in.

For example, the guidance will vary depending on your age, your location, the value of your property, and whether you plan to leave an inheritance to anyone.

However, the general guidance is consistent no matter where you go.

Firstly, anyone offering equity release guidance services should inform you of the conditions of their advice, such as any arrangement fees you have to pay. They should also discuss how equity release works.

This will involve explaining the various options when it comes to releasing equity, such as home reversion schemes and lifetime mortgages, so that you are aware of the different steps you could take.

Following this, you will receive a Key Facts Illustration (KFI) that takes into account your personal situation.

This is likely to include: the unique features you have selected for your scheme, the amount you would like to lend, the specific type of scheme you would like to have, the interest rate of your chosen scheme, the cost of the scheme, and the potential consequences of changing your mind about equity release once you have already been through the process of accessing it.

At this stage, you are still free to leave and find another financial adviser if you are not happy with the service you are receiving.

Finally, you will receive an offer for equity release that includes all of the details that are relevant to the scheme. This tends to be the amount you are borrowing, the fees that you need to pay, and your personal details such as your name and address.

FAQs About Releasing Equity

The two types of schemes are lifetime mortgages, of which there are many varieties and property reversion schemes.

Put simply, with a mortgage that is lifetime, you are lending money secured against your home with the knowledge that this will be repaid after your death when the sale of your home is finalised.

On the other hand, with a property reversion plan, you choose to sell your home (or part of it) to a provider while you are alive, and you remain a permanent resident in your home for the rest of your life.

1. What is a lifetime mortgage?

This is the most common type of scheme relating to the release of equity, and the most widely available. As a result of this, this type of mortgage can be easily personalised by adding special features and add-ons.

The idea of a lifetime mortgage is, rather than paying off your mortgage in regular instalments, homeowners aged 55 and over can borrow money from an equity release provider and the interest will accumulate over time.

The loan that you borrow will only need to be paid back when you pass away or move into long-term care, as the money is only taken from your home when it is sold. However, in terms of interest, it is possible to pay some of this back.

As mortgage lenders of the lifetime variety do not threaten you with negative equity, you can rest assured that you will never end up owing an amount higher than the value of your house.

However, if you attempt to repay early, you could face a 25% penalty, and if you back out of the scheme, it can be very expensive to switch to another one.

While you are alive, you will remain the rightful owner of you property, so you can profit off the value of your home without having to move. However, this is sometimes conditional i.e. you may be required to remain in the property permanently to keep this status, depending on the rules of your equity release provider.

There are many types of lifetime mortgages, including enhanced, drawdown, income, and interest-only. There are benefits and drawbacks of each one, so we would recommend reading about them in detail before you decide which one is right for you.

2. What is home reversion?

This is the second, and less common, form of equity release scheme, and it is reserved for people who are 65 years old or more. It works as follows: a provider purchases a fixed share of your home, with the knowledge that the value of this share will increase over time.

In return, they provide you with a tax-free lump sum of money, or sometimes partial payments, that are less than the value of the share. This allows you to live in your house until you pass away without the burden of paying rent. The money only goes to the company when your property is eventually sold, which will be after you pass away.

There will be an agreed percentage of money that is distributed to different people, so you can still pass on your income as an inheritance if you have a property reversion, but part of your income will got to the provider of release equity.

If you opt for a home reversion, your cash is interest and tax-free, so you are free to spend it on what you prefer. This is useful for pensioners who need to use this funding to pay their bills or make their home more disabled-friendly.

The no negative equity policy is also implemented in these schemes, which is reassuring for people who worry that they will end up paying out more than what their house is worth.

3. Who qualifies for equity release?

Releasing equity is only feasible for the elderly, which means people over 55 for lifetime mortgages and people over 65 for home reversion. It is also a requirement to be someone who is living in the UK and owns their own home, and who is prepared to stay in this house for the rest of their life.

Finally, to qualify for equity release, your property must be worth at least £70,000 for you to be considered for an equity release scheme.

In terms of who the release of equity benefits the most, it is designed for people who are struggling to make ends meet in retirement, yet their home retains value that they could profit from. It is perhaps most appealing to people who do not intend on passing on inheritance to their spouse or partner, or other family members, when they die.

4. What are the advantages of equity release?

The most obvious benefit of taking equity release is that it allows pensioners to release money right now. They can enjoy their life and ensure they are financially comfortable as they age, rather than struggling with the goal of passing on a healthy inheritance.

Another great benefit is that, depending on the type of equity release scheme, the interest rates that first apply to the funding are fixed for life, so you do not have to worry about the financial challenge of coping with increasing interest.

For people who are happy with the size and location of their house, and therefore don’t want to move to a smaller house, releasing equity is a great way of remaining a homeowner in the house that they want to live in for the rest of their lives, and having access to funding that they can use however they please.

Finally, even for individuals who are passionate about passing on an inheritance, some equity release providers allow recipients to protect some of the value of their property and keep it separate to the scheme, which means it will be reserved for the people in the recipient’s will.

5. What are the disadvantages of equity release?

First and foremost, one cannot ignore the high cost that comes with accessing part of the value of your property while you are still alive. Though it is intended to help people who are in a tough financial position, a more affordable option is to simply move to a smaller property.

For this reason, many people see equity release as a last resort option for people who want to release money from their home for financial reasons, or who do not have a beneficiary to whom they want to pass their assets.

Another drawback is that it is very difficult to back out of these schemes, so once you have committed to it, you must continue with it unless you are prepared to pay a large amount of money.

Finally, participating in an equity release scheme does affect your tax status, so if you currently receive means-tested benefits from the State, it is possible that you will no longer be able to receive these benefits owing to the change in circumstance.

6. Is equity release safe?

Yes – equity release is a tried-and-tested method of earning additional income towards the end of your life, so it is very safe. If you jump into it, you could be taking unnecessary risks, so we recommend carefully considering which equity release scheme you would like to opt for and seeking the appropriate legal advice.

Always ensure your provider is a member of the Equity Release Council (ERC), as this organisation serves to regulate providers and ensure they are meeting high standards in order to prevent them from overcharging you or introducing negative equity.

It is also advisable to make sure your provider is in the FCA register, as they also have high standards for lending money, and they can also be of great value if you need to make a complaint about your provider at any point, as they specialise in resolving complaints.

Things to consider before equity release

Before you do anything else, check whether you are in the position to be able release equity, as you don’t want to go through the process of requesting funding only to realise you are not eligible.

You should also consider whether equity release is right for you. Is it something that would be more beneficial or more detrimental to you and your family?

For example, if you are intent on leaving a large inheritance, you may want to consider other options. If you are claiming benefits and participating in this scheme would lead to the removal of these benefits, this is another thing to consider.

Make sure you choose a reputable financial advisor who is willing to inform you of the benefits and withdrawals of releasing equity, as well as explain the difference between the two options, lifetime mortgages and property reversion.

Your financial advisor should be offering tips on how to make the most of equity release, such as withdrawing smaller amounts when you need them, as interest is only charged on what you withdraw and this means you will be paying less interest overall.

Finally, make sure you are prepared to stick with this scheme for the rest of your life, as you do not want to be dealing with early repayment penalties.

What are the Alternatives to Releasing Equity: Time to Downsize or Take Out an Unsecured Loan

One alternative to schemes involving the release of equity is to consider downsizing. This is ideal for people who want to avoid taking out a loan, and who are perhaps living in a house that is no longer fit for them i.e. not accessible or too large to maintain.

However, downsizing is not always the best option as some people need to keep the space they currently have in the house, the modifications they have made for their disability, or the location they live in, particularly if they have family nearby who frequently help them.

Another option is to take out an unsecured loan. This is based on your credit rating rather than your assets, so it is great for people who want to borrow money quickly and easily, knowing that they can pay it back in the near future.

However, the interest on unsecured loans is usually much higher, and you tend to get a smaller amount to lend which may cause you to have to pay back more throughout the scheme.

Charities That Help With Debt

Finally, there are programmes in the UK that are aimed at people in any sort of debt, and they can help you if you are struggling financially and you are not sure what your next step should be.

For instance, the National Debtline website is fantastic for providing users with information about how they can deal with their debt.

Not only do they have informative debt advice fact sheets, but they also have a webchat that allows users to communicate with an advisor anonymously. This service is open every weekday from 9am-8pm and Saturdays from 9.30am-1pm.

Grants to Help Pensioners Pay Their Bills

If you are over 60 and you are finding it difficult to keep up with your electricity bills in this stage of life, there are grants that can be provided to help you keep your house warm:

1. The Winter Fuel Payment

The Winter Fuel Payment is offered to people who were born before the 5^th August 1953 and who are in receipt of a social security benefit, including a state pension.

Recipients benefit from £100-£300 of funding which is crucial for some elderly people in the winter months, when electricity and gas bills rise.

2. The Warm Home Discount

Another helpful service is the Warm Home Discount, which provides pensioners with £140 to put towards their gas and electricity bills if they receive a low income.

This scheme is available for people living in Great Britain, but unfortunately, it does not extend to Northern Ireland.

3. The Cold Weather Payment

The Cold Weather Payment is another helpful grant, though it only comes in handy occasionally, as the funding is only provided when there has been an entire week of sub-zero weather conditions. Recipients are paid £25 to compensate this, which they can only receive if they are claiming certain benefits.

Are There Other Options For Financial Aid to Consider Before I Get Equity Release?

Though releasing equity is one way to tackle the problem of financial insecurity for older people, there are other ways to do this that should also be considered.

Get Advice On Claiming Benefits

If you are not currently claiming state benefits and you believe you may be entitled to them, we encourage you to look into this. Benefits are an essential source of income for many people, and it is easy to check whether you are eligible for them using online benefits calculators.

By using the free benefits calculator on the Policy in Practice website, you will be able to see how much money you could be receiving based on your current situation.

It is also helpful to find out how your benefits would be affected if you decided to opt for equity release, and this benefits calculator allows you to see how changes to your income can affect the number of benefits you receive.

Speak to an Adviser About Home Improvements

There is aid available for home improvements, which is particularly helpful if you struggle with mobility issues and your home is not currently designed to accommodate your disability.

Organisations such as Foundations, the National Body for Home Improvement Agencies in England, can advise you on how to make adaptations to your home, as well as point you to local funding that could relieve some of the financial burden.

Why Should I Consult Equity Release Warehouse For Guidance

You should reach out to us because we will equip you with everything you need to make an informed decision on releasing equity.

We are experienced in analysing our client’s personal situations and deciding which equity plan would be most suitable for them, and we are confident that our specialist equity release advice would also benefit you.

On our about us page, you will get a feel for who we are, where we started, and how we can help people like you. We also recommend heading to our plans page, where you can learn about the different ways you can release equity in great detail.

For lifetime mortgages, these include: lump sum plans, interest-only plans, enhanced plans, drawdown plans, interest-only plans, income plans, voluntary repayment plans, second home or holiday home plans, and buy-to-let plans.

We have also written extensively about other available plans, including retirement mortgages, retirement interest-only mortgages (RIOs), and property reversion plans.

Before getting in touch with us, you can use our equity release calculator to figure out how much you could release based on your home’s value among other factors.

However, we will provide you with a more accurate personalised quote either over the phone, or through our site when you enter your details here.

Contacting Equity Release Warehouse

To speak to one of our expert advisors, contact us on 0330 058 1579. We are open weekdays and weekends from 8 am to 8 pm, and we are always happy to help.

Alternatively, you can request a callback on our website, and we will be in touch as soon as possible.

We want to reassure you that you will not be obliged to take any action regarding releasing equity. When you contact us, it is our job to check your eligibility, inform you of your options, and encourage you to carefully consider whether this is right for you.

If you decide you are not willing to opt for an equity release plan after speaking to us, you do not have to commit to anything. We are simply here to offer advice and help you to take your next step (i.e. selecting the best form of equity release) if equity release is something that appeals to you.