Equity Release in Scotland

Lifetime Mortgage & General Equity Release Advice in Scotland
Reviewed by Tom Philips

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Equity Release in Scotland

People all over Scotland are considering releasing equity from their home. Equity release in Scotland is a really clever strategy which allows people to unlock the equity that has built up in their home over the years.

When you release equity from your home in Scotland, the money that you receive will be tax-free.

You can either gain access to this money in one large lump sum, or you can choose to gain access to your money through monthly instalments.

The great thing about equity release in Scotland is that you can use your equity release money however you want.

You can use the money to pay off any debt that you might have, or you can use the equity release money to pay for health and care costs as you enter later life. You might choose to use the money on a second property, or to pay for a nice holiday or a new car.

There are a number of factors in place when it comes to qualifying for equity release in Scotland.

For example, you will need to be aged 55 or over, own your own property in the UK which is worth more than £70,000 and have paid off a significant amount of your mortgage over the many years that you have owned it.

If you are considering equity release in Scotland, then speak to a member of the Equity Release Council, where our expert advisors will use our very own equity release calculator to ensure that you get the very best deal available to you.

All advisors are regulated by the Financial Ombudsman Service (OBS) and Financial Conduct Authority (FCA) and appear on the Financial Services Register. Advisors also have equity release-specific qualifications, issued by The London Institute of Banking & Finance (LIBF) such as the Certificate in Mortgage Advice and Practice (CeMAP).

We are able to offer help across Scotland in Glasgow, Edinburgh, Aberdeenshire, Lanarkshire, Fife, Skye, Inverness, St Andrews, Loch Lomond, Cairngorms, Dundee, Fort William, Shetland Islands, Stirling, Oban, Glencoe, Portree, Isle of Mull, Islay, Pitlochry, North Berwick, Aviemore, Falkirk, Iona, Perth, Ullapool, Kirkwall, Dumfries, Dunfermline, St. Kilda, Glenfinnan, Plockton, Stonehaven, Stornoway, Barra, Fort Augustus, Greenock, Culross, Nairn and Braemar.

What is Equity Release?

Equity release allows homeowners aged 55 or over the opportunity to gain access to the equity that has built up in their home, whilst being able to remain living in the home that they know and love for as long as they want.

Equity includes your monthly mortgage repayments, your initial house deposit and the increase in value your house has benefited from.

When you release equity from your home, you gain access to this money. You can spend this money however you want, whilst being able to remain living in your home until you pass away or move into a care home.

When you do pass away or move into a care home, your loved ones will be responsible for selling your house. However, they won’t receive any of the proceeds from the sale of the house. Instead, this money will go towards paying off the total loan value [1].

Your house should have increased in value during the duration of your equity release loan, meaning that it should cover the total loan amount and hopefully even leave some money left over for your loved ones as an inheritance.

This is the ideal situation, although as we all know, not all houses increase in value over the years. If your house does decrease in value during the duration of your loan, then you will benefit from the no negative equity guarantee.

This guarantee ensures that even if your house decreases in value significantly, so much so that it no longer pays off the loan, the lender will step in and cover the difference.

Unlike traditional mortgages, with equity release there are no monthly repayments to stress about. You do not pay a penny until you pass away or move into a care home, when your house is sold.

You can however opt to pay off some of the loan early, in an attempt to reduce the amount of interest you are charged. Proceed with caution though, as you might be charged extra for doing so [1].

There are lots of different types of equity release plans, which seems confusing at first. Put simply, the two most popular types of equity release plans are lifetime mortgages and home reversion plans.

You can take out either loan in either a lump or through smaller, frequent payments known as a drawdown plan.

What are the benefits of equity release in Scotland?

There are a number of benefits associated to equity release from your Scotland home which are listed below for you:

1. Spend the money on whatever you want

The main benefit of equity release and the main reason so many people opt for equity release is that you are able to release a large lump sum. There aren’t many restrictions on how you can spend your money, either.

Usually, people are able to help friends and family members with big expenses or are able to make some home improvements to their property.

Other people choose to spend their equity release money on paying off their traditional mortgage. This is a huge relief for many people, although you do have to have paid off the majority of your traditional mortgage in order to qualify for an equity release loan.

2. Remain living in your home

Whilst enjoying this money, you are able to remain living in your home for as long as you want. As long as you don’t break any terms and conditions of your contract, no lender has the right to ask you to move out of your home.

3. No monthly mortgage payments

You don’t have to make any repayments until after you pass away. If you want to, you can do so although this might mean that you have to pay an early repayment charge.

4. Fixed interest rates

Interest rates are always changing, but with equity release loans all interest rates are fixed for the duration of your loan.

This means that you are able to work out exactly how much money you will end up owing each year, until you pass away or move into a care home. Naturally, the longer you live or remain living in your home, the longer your loan will continue.

Can You Get Equity Release in Scotland?

The short answer is that yes, you can get equity release in Scotland. When you release equity from your home in Scotland, you are able to spend your money however you want to, and will be charged interest on any money you withdraw from your house.

As with other places in the UK, you will only repay the equity release loan when you pass away or move into long-term care. When your next of kin and loved ones sell your property, the money from the sale will cover the cost of the loan.

Across Scotland and the rest of the UK there are two main different types of equity release. These two main types of equity release in Scotland include lifetime mortgages and home reversion plans.

If you are considering equity release in Scotland, then it is important to understand the differences between lifetime mortgages and home reversion plans, some of which are explained below.

1. Lifetime mortgage

Lifetime mortgages are the most popular type of equity release in Scotland and are used by millions of people across Scotland and the rest of the UK.

With any lifetime mortgage across Scotland, you will be taking out a loan and be using your house as security on that loan.

You will remain the sole owner of your house but will be able to gain access to the equity that has built up in your property.

You are able to opt for your money in one large lump sum or can choose to receive your equity in smaller more frequent payments. It’s entirely up to you and your circumstance.

If you qualify for it, your lender might even allow you to opt for a mixture of lump sums and frequent monthly payments into your bank account.

If you want frequent payments, you might be better suited to a lifetime drawdown mortgage or an income lifetime mortgage.

It is important to remember that with a lifetime mortgage, you will be charged interest on your loan.

As with any loan, if this interest is left to build up then it will turn into compound interest. However, if you want to avoid this then you can choose to pay off some of the interest on your loan through monthly repayments.

In order to qualify for a lifetime equity release in Scotland, then you will need to be aged over 55 years old, own your own house in the UK with a value of £70,000 or more and you will need to have paid off the majority of your pre-existing mortgage by the time you come to apply for your equity release loan in Scotland.

2. Home reversion plan

A home reversion plan is similar to a lifetime mortgage, but is slightly different. Due to these differences, it is deemed less popular than a lifetime equity release mortgage across Scotland and the rest of the UK.

When you opt for a home reversion plan in Scotland, you are choosing to sell a certain percentage and part of your much-loved home to the lender. In return for part of your home, you will be given your equity.

Again, you can choose to receive this in one large lump sum, or through a series of smaller instalments.

Home reversion plans are less common than lifetime mortgages across Scotland because they mean selling off a part of your home, and therefore potential inheritance that you were planning on giving to your family members and loved ones to the bank and lender.

This means that you lose ownership of a part of the house – even though you can remain living there without having to pay any rent.

It is also highly important to understand that when you choose a home reversion plan in Scotland, you will also be selling a percentage of your beloved home back to the lender for less than the current market value.

This means that you will get less by selling your house this way than you would if you were to put your house on the property market.

It is also really important to understand that less people qualify for a home reversion plan, as they will need to be aged 65 or over in order to qualify.

If you think you would benefit from home reversion equity release in Scotland, then speak to our team at Equity Release Warehouse for advice.

Does Equity Release in Scotland Work any Differently to The Rest of the UK?

The short answer is that equity release in Scotland works in the same way as it does throughout the rest of the UK.

However, what your equity release plan looks like will depend not on where you are in the country, but on which lender you choose to opt for. For example, the benefits and rules differ from lender to lender.

Nevertheless, the qualification criteria do tend to remain the same across most lenders in Scotland, mainly focussing on the below factors.

You usually need to be aged over 55 years old for a lifetime mortgage
You usually need to be aged over 65 years old for a home reversion plan
You need to be in good health, with good life expectancy
You will need to have a good credit history. Although having a bad credit history won’t stop you from getting an equity release plan, it might limit how many lenders will accept you
Your house needs to be valued at least £70,000 and needs to be in good condition

It is important to consider that if you live off of mainland Scotland, on one of the surrounding islands, then the case might be different.

This is why it is always important to speak with an equity release advisor before choosing your plan, as it might not be available to you if you live in a remote part of Scotland off of the mainland.

How Do I Choose the Right Equity Release Plan for Me?

Choosing the right equity release plan in Scotland for you is extremely important. It is not something that can be rushed into, and you must think carefully about why you are opting for equity release in the first place.

It is important to take into consideration how much equity you really, truly need. You should not take out more money than you need to, as you will be paying interest on this loan which will quickly compound if you are not careful.

You will also need to take into account your age and your current health, as this will impact how much equity you are able to release from your home in the first place.

You will need to think carefully about whether your situation calls for a lump sum or a series of smaller instalments.

For example, if you are hoping to spend your equity release on a holiday then a lump sum might be better for you.

However, if you are hoping to spend your equity release money on a better and more comfortable lifestyle, then monthly instalments are better for you [2].

It is important to remember that you must speak to an equity release mortgage advisor before you apply for your equity release scheme, as you will need advice and support through the process.

You must also be open and honest with your equity release advisor about your current financial circumstances, which will include your motivation and reasoning for wanting to release equity from your home and how you plan on spending the equity you do receive.

Your equity release advisor in Scotland will help you choose the right equity release plan for you, and will ensure that you are likely to be accepted before applying.

You must be open to all of the suggestions that your equity release advisor suggests, even if they suggest a plan and equity release scheme you did not originally consider.

All equity release advisers across Scotland and the rest of the UK should be regulated by the Equity Release Council which helps to create and maintain standards across the equity release financial industry. Furthermore, advisors are qualified with an CeMAP or an equivalent Level 3 Mortgage Advice qualification.

How long does equity release take?

Usually, it takes around eight weeks to process an equity release loan. This is from the initial application to the money landing in your account. The process is similar to that of applying for a traditional mortgage.

There are a number of things that you will need to initiate and chase during this process to speed things up as much as possible. Usually, you will need to ask your solicitor for updates throughout the process.

How long the process takes often depends on the complexity of your application as well as which lender you opt to go with.

Before you officially apply for an equity release loan and engage a solicitor you will need to talk to an equity release adviser a few times to ensure that you are making the right decision for you.

There will and should be no pressure from your adviser to make a decision. At Equity Release warehouse, we know that releasing equity from your home is a huge decision and is not one that can be rushed.

What Can I Spend My Equity Release Money On?

One of the biggest benefits when it comes to equity release in Scotland is that you are able to spend your money in lots of different ways, and there are very few limits on what you can buy with it.

Some people might choose to spend their money on themselves. You might fancy treating yourself to a new car or a once-in-a-lifetime holiday that you have always dreamed of.

Other people choose to spend the money they receive on something more practical, such as home improvements.

Home improvements are a great way of increasing the value of your property, and you might even benefit from some home improvements as you grow older.

For example, an extension might create some much-needed space, or you might choose to make your house more comfortable and practical if you suffer from ill health or old age.

Other people might choose to pay off any debt or credit cards with their equity release money, which is always recommended if you are suffering from debt in later life [2].

People have also been known to spend their equity release money on their loved ones and family.

For example, you might want to give your grandchild a helping hand when it comes to University fees or saving for a deposit on a house. Others choose to start up a new business or investment.

If you still haven’t paid off your entire mortgage by the time you apply for equity release in Scotland, then you will most likely need to use some of the money you receive through your equity release in Scotland to pay off your pre-existing mortgage.

The rest you can enjoy and spend however you want to.

If you are considering equity release in Scotland and want more information on how you can spend these funds, then speak to a member of the Equity Release Warehouse team for advice and support.

What is the No Negative Equity Guarantee?

With more and more people living longer and longer, the interest that adds up on your equity release scheme could one day grow bigger than the value of the property you own, depending on the current housing market’s performance.

Lots of people worry about this happening when it comes to equity release in Scotland. This is because they do not realise that equity release plans in Scotland all benefit from a no-negative equity guarantee.

The no negative equity guarantee ensures that even if the property sells for less than the amount of debt you are in, you and your next of kin will not be liable to pay the difference. The lender will be responsible.

However, the property market is usually on the rise, meaning that when it comes to selling your house and repaying your debt after you pass away, your family will most likely be entitled to a significant amount of inheritance after the loan is paid off.

The Equity Release Council [3] ensures that all equity release schemes across Scotland and the rest of the UK benefit from a no-negative equity guarantee.

You should always check with your lender and your equity release advisor that your equity release plan includes a no-negative equity guarantee.

This not only protects you but your family from any future debt or financial stress or uncertainty [3].

How Can I Be Sure I’m Getting the Best Advice?

The great thing about equity release in Scotland is that all equity release advisors and plans across Scotland and the rest of the UK need to be regulated by the Financial Services Conduct Authority [5], known as the FSA.

The FSA makes sure that everyone gets a fair deal, and if someone is offered an unfair plan or deal then the FSA will step in and take legal action. Due to this, the equity release industry is good at being fair and monitored [6].

The Equity Release Council also ensures that all plans and advisors are fair and responsible, offering customers only the best and most sensible plans. You must ensure that your equity release advisor is monitored and regulated by the Equity Release Council.

Equity release advisors in Scotland also play a key role when it comes to ensuring that you are getting the very best advice when it comes to equity release in Scotland.

They will ensure that you are given all of the appropriate and necessary information, and will even draw up a mortgage illustration for you so that you are able to see just how much money you will receive, and how much you will need to repay in the form of interest.

You need to be really clear and honest with your equity release advisor so that they have a clear and true picture of your current financial situation.

You will also need to be really honest about how you want to spend your equity release money.

You should not be surprised if your equity release advisor asks you questions about these things during your first or second meeting with them.

What Does The Equity Release Council Do?

Below, we outline what the Equity Release Council does:

1. They set standards

The Equity Release Council [3] is fantastic at setting standards across the equity release industry.

For example, the Equity Release Council ensures that all interest rates on equity release loans must be fixed and if they are not, then the variable rate must be capped throughout the entirety of the loan.

The Equity Release Council also ensures that individuals are able to remain living in their home for as long as they want, and that no lender has the right to ask them to leave.

They also ensure that you only have to repay the equity release loan either when you pass away or move into long-term care for health reasons.

As discussed previously on this page, the Equity Release Council also ensures that all equity release loans in Scotland must include a no negative equity guarantee which means that even if the value of your house is not as much as the loan taken out, neither you nor your family will be liable to repay the difference.

The Equity Release Council [3] also set standards when it comes to voluntary repayments, which states that all equity release loans must allow individuals to make voluntary repayments if they choose to, penalty-free.

2. They provide you with the best information available

Equity release advisers in Scotland are also there to provide you with the best information available to them, and will be able to lay out the pros and cons to equity release.

They will never try to sell equity release to you, they are simply there to provide you with the information so that you can make the best decision that is right for you.

They will also be really clear about the costs surrounding equity release in Scotland, including the set up costs, the costs of a valuation and how much you will need to repay in interest.

Your equity release advisor will also highlight what the consequences will be to any tax or means-tested benefits you currently receive or are due to receive in the future.

Your advisor will also be able to talk through what would happen if you choose to ever move home in the future, or if the value of your house changes dramatically.

3. They deal with any complaints across the industry

One of the best things the Equity Release Council does is deal with any complaints throughout the industry.

Although the industry is highly monitored and regulated by the FCA and Equity Release Council, from time to time mistakes do happen and things can go wrong.

If an individual has a complaint, either against an advisor or a lender, they will need to make them aware and try to resolve the issue with them before doing anything else.

If this proves difficult, then they will need to report this issue to the Equity Release Council. They will be referred to the Financial Ombudsman Service [6], who will then undergo an impartial investigation.

Some more considerations before Choosing Equity Release in Scotland

Below, we outline some important considerations to bear in mind before applying for equity release:

1. You will end up owing more money

You will need to think carefully about how equity release in Scotland might affect you and your finances in the long term, as you might end up owing more money in the future.

The interest on your equity release loan will compound over time, which could also mean that your next of kin and loved ones might not get as much inheritance if you opt for a scheme such as the home reversion plan.

In addition to this, if you do not pay off the interest on the equity release loan, then this will add up and compound, and will eventually need to be repaid upon the sale of the property, meaning that your next of kin will receive less money.

2. Downsizing your property might be a cheaper option

If you are aged over 55 but do not want to consider equity release, then you might want to consider downsizing your property as a way of gaining access to more money.

As you can see above, the costs of equity release in Scotland can mount up. However, the costs of downsizing your property could be completely free.

We list all the potential disadvantages of equity release here.

3. Speaking to an equity release advisor is a must

In order to apply for an equity release loan, it is incredibly important that you speak with an equity release advisor so that they can offer you the best advice and plans in your area.

If you want more information on equity release in Scotland, then call Equity Release Warehouse for a free call with our specialists and advisors.

They will be able to provide you with information on how the process works, as well as the pros and cons when it comes to different equity release plans across Scotland.

Our advisors will be able to help you through each milestone, such as choosing the equity release product that best suits your needs, to appointing an equity release solicitor and taking care of issues such as estate planning.

All solicitors are registered with the Law Society of Scotland and you can raise any concerns that might arise with the Scottish Legal Complaints Commission.

Can I use equity release to pay off an interest-only mortgage?

Yes, you are permitted to spend your equity release money on paying off an interest-only mortgage. Usually, people take out a lifetime mortgage in order to do this, which can be taken out as a lump sum or a drawdown plan.

An interest only mortgage is when you only pay off the interest on your mortgage each month, instead of paying off the actual loan amount. This amount is due when your mortgage comes to an end.

This type of mortgage is great for anyone who wants to keep their monthly mortgage payments as low as possible, and for those who plan on saving enough money each month in preparation for the total loan repayment.

Likewise, this type of mortgage is also a great option for anyone who will be coming into some form of inheritance or large lump sum of money by the time their mortgage comes to an end and the loan is due.

However, some people near the end of their interest-only mortgage and realise that they cannot pay off this amount.

This is when equity release often comes into play, as this is a great option for anyone who’s looking for a large lump sum whilst being able to remain living in their property.

Can I access equity release in Scotland if I’m under 55?

There are a number of qualification criteria associated to equity release. Unfortunately, you are unable to release equity from your home unless you are over 55 years old.

Most lenders set the minimum age requirement at 55 years old for lifetime mortgages and 65 years old for home reversion plans.

However, this does differ between lenders and your lender will also look at your specific circumstances before issuing you with an equity release loan.

What are my options if I’m under 55?

Whilst you are unable to release equity from your property if you are under 55 years old, there are a number of ways you might be able to get your hands on some cash.

For example, you might be able to apply for a secured loan, meaning that you borrow some money against an asset that you own. This could be your house or a car, or something else of high value.

If you need to borrow a large sum of money, then you could consider re-mortgaging your property. You can do this alongside paying off a traditional mortgage, but would need to take out a higher LTV (loan to value) ratio.

This is usually the best option for anyone under 55 years old who’s property has recently been valued and has increased in value significantly since you first bought it.

Let’s use an example to explain. If someone buys a home for £200,000, putting down a £20,000 (10%) deposit, then their mortgage (loan) would be £180,000.

This means that their LTV (loan to value) ratio would be 90%.

Years later, this property is valued again and it has increased in value significantly – hooray! Now, their property is worth £250,000. In this time, they have paid off a chunk of their mortgage.

Let’s say that they have paid off £10,000 of their mortgage, meaning that their equity in the property is now £80,000. This means that the outstanding loan is now £170,000 and that the LTV ratio is now less.

If this individual decided that they wanted to gain access to this equity, then you could re-mortgage your property, using an 80% LTV ratio on a £200,000 mortgage. This would release £30,000 in equity.

Whilst you are then free to spend this money on whatever you want, this loan will continue for a number of years to come.

How much equity can I release from my Scotland-based property?

With most traditional lifetime mortgages, you are able to release anything between 20% and 50% – 80% of the total value of your property. This does depend on a number of factors such as your age, your health and the value and condition of your property.

Naturally, the more your house is worth then the bigger this sum of money will be.

You are unable to release equity on a property if it is worth less than £70,000 and whilst there aren’t any upper limits when it comes to the value of your property, you might need to seek specialist advice and legal advice if the value of your property exceeds a certain amount.

How is my release amount calculated?

How much equity you are able to release from your property depends on a number of factors, including your health, your age and the value of your property.

Usually, your equity release adviser will sit down with you during the early stages of your equity release application to assess how much equity you will likely be able to release.

To do so, they will use their very own equity release calculator, like the one we have here at Equity Release Warehouse.

In order to gain a more accurate picture of how much you can release, your chosen lender will send someone to your property to complete a home valuation, so that they can determine exactly how much your house is worth.

Essentially, your lender will loan you a set amount, as long as they are confident that they will get their money back by the time you pass away or move into a care home, upon which your house will be sold and the loan paid off.

What are the equity release set-up costs?

When considering equity release, it is important to consider the set up costs involved with applying for your loan. These costs include things such as interest rates, solicitor fees and home valuations.

Your solicitor fees alone could add up to anything between £1,000 and £2,000, depending on the complexity of your equity release application.

Additionally, you will have to pay for a home valuation which could cost £100, depending on the location and size of your property and your estate.

You will also have to pay for an equity release adviser for your initial support and advice to initiate the equity release process, although the majority of equity release advisers simply charge a percentage of the completed loan amount.

Whilst some advisers do charge for their advice, others do not. Some advisers will also get paid by the lender instead of the homeowner on completion of the loan, similar to most traditional mortgage advisers [2].

What are the best equity release interest rates?

The below table is valid as of November 2023:

Provider	MER	Type	Product
Aviva	7.68%	Fixed	Drawdown
Aviva	7.68%	Fixed	Lump sum
Pure Retirement	6.03%	Fixed	Drawdown
Pure Retirement	6.03%	Fixed	Lump sum
Just Retirement	6.66%	Fixed	Drawdown
Just Retirement	6.66%	Fixed	Lump sum
Canada Life	6.73%	Fixed	Lump sum
Canada Life	6.73%	Fixed	Drawdown

As you can see, Pure Retirement is offering the best rate of interest on equity release at 6.03%. Interest rates will also vary depending on your circumstances, as well as whether you opt for either an income or a lump sum of cash.

Can I be refused equity release?

Yes, it is possible to be refused equity release. This can happen if your personal circumstances or property does not satisfy the lending criteria.

For instance, the location of your property (for example, if the location is deemed a flood risk), your property’s construction type/condition as well as the value of your property could mean equity release is refused.

You need to have at least £70,000 of equity in your property. Factors such as secured debt can reduce the amount fo equity you have in your property. You will also be refused equity release if you are under 55 years old.

How does equity release affect tax in Scotland?

If you are considering taking out an equity release loan, then it is important to understand that the money you receive is classed as a loan and not income. Therefore, your equity release money is exempt from income tax. This is the case even if you’re releasing money to increase your income through taking out a drawdown plan.

However, there might be some implications when it comes to inheritance tax, as taking out an equity release loan naturally has significant implications on the value of your property or estate.

Can I still protect an inheritance with equity release?

Yes, there are now many features drawn into equity release plans which means that your inheritance will be protected.

Unfortunately, for many years, the majority of the public believed that opting for an equity release loan meant that they were ripping their loved ones and next of kin of their inheritance. However, this is not the case.

Whilst taking out an equity release plan might reduce the amount of inheritance you leave your loved ones, you will not be robbing them of all of their inheritance.

The Equity Release Council ensures that all of its members include a no negative equity guarantee in their plans.

Essentially, even if your property decreases in value significantly by the time you pass away or move into a care home, your loved ones will not have to pay off the loan on your behalf.

Will equity release affect my entitlement to means-tested benefits in Scotland?

Yes, taking out an equity release loan will affect your entitlement to means-tested benefits. Unfortunately, if you do receive any means-tested benefits, then your adviser might suggest that equity release is not the best option for you if it is going to take away money that you rely on in order to live.

Therefore, if you are considering taking out an equity release loan then you should talk to your equity release adviser first, to see how your means-tested benefits might be affected.

Equity release money is classed as savings, and you will legally need to inform the Department of Work & Pensions of your change in circumstances if you also claim means-tested benefits.

However, equity release does not affect your right to claim State Pension.

What happens if I go into care?

Your equity release loan will come to an end if you are no longer able to remain living in your home, including if you go into a care home.

If you do move into long-term care then your equity release loan comes to an end and your house will need to be sold.

You do not have to pay any early repayment charges if this is the case, as per the terms and conditions of your contract.

Your next of kin and loved ones will have anywhere between 6 – 12 months to sell your house and repay the loan using the proceeds from the sale of the house [3].

What happens to equity release on death?

Once you pass away, your next of kin will have anywhere between 6 – 12 months to sell your property. The money from the sale of your house will pay off the equity release loan, including any interest.

Once you do pass away, your family will be responsible for notifying your lender. They will also have to send the lender your death certificate as well as any probate information.

Your next of kin will then be responsible for selling the property, which will hopefully pay off the entire equity release loan. Anything left over will go to your next of kin as their inheritance.

Which Banks/Lenders Offer Equity Release Products?

There are a few banks which offer equity release loans. However, most banks across the UK work with other providers to offer equity release as an option.

In fact, there are only limited high-street banks that offer equity release as an option without working with another company.

The two main banks that offer equity release are Lloyds and Nationwide. Lloyds also offer equity release loans, which work as an umbrella bank for Halifax and Scottish Widows.

As only a select few high street banks offer equity release loans, lenders such as Sun Life, Key and Legal & General step in to offer loans to the masses.

It is worth noting that all banks and lenders alike are regulated by the Financial Conduct Authority, which means that they have to operate within a set of rules and guidelines in order to offer equity release loans to the public.

Can You Switch Equity Release Providers at a Later Date?

Yes, you are able to switch equity release lenders should you want to do so. You might want to do this if you want to change the terms and conditions of your contract or want to look for a better interest rate.

For example, you might find that your interest rate is no longer as competitive as it once was and therefore decide to search for a better deal. Likewise, you might want to switch lenders in order to gain access to more equity within your home.

Additionally, you might find that your equity release contract was taken out so long ago that there are now better deals and features out in the market which seem more attractive.

If you decide that you want to switch providers at a later date, then you should talk to your equity release adviser for advice and support on how to go about this.

What happens if my equity release provider goes bust?

As all equity release loans are protected by the Financial Conduct Authority, your money will be protected even if your lender goes bust. If this happens, your lender has to sell your plan to another lender.

Your terms and conditions and interest rate will stay the same and these guarantees should be written into the terms and conditions of your contract.

The Financial Services Compensation Scheme is also responsible for ensuring that clients will be paid compensation if their lender goes bust and is no longer able to release their funds.

In order to ensure that your investment and loan is protected, ensure that your equity release adviser and lender are regulated by the Financial Conduct Authority and are members of the Equity Release Council.

How Can Equity Release Solicitors Help Me With Equity Release?

Equity release solicitors are responsible for ensuring that each applicant understands the ins and outs of their equity release plan and contract and are well aware of the financial and legal implications of their loan.

Your solicitor is also responsible for ensuring that you do not fall victim to any scams and will help to secure you the first legal charge on the property.

They are also responsible for drawing up your contract and exchanging (sending over) the money on the day of completion. The Equity Release Council also recommends that you only ever opt for equity release councilors who are members of the Equity Release Council [4].

Can you get equity release on a leasehold property in Scotland?

Yes, you are able to release equity on a leasehold property. Whilst the lending criteria might be different for leasehold properties, lots of people up and down the country have successfully released money from a leasehold property.

They will send a surveyor round to the property to value the house and to check the condition of the property, so that they feel confident enough that they will be able to make their money back.

If your leasehold term is coming to an end (with less than 80 years left on the lease) then you might need to extend your lease whilst applying for your equity release loan. Usually, your solicitor will be able to do this alongside your equity release application.

What are the Alternatives to Equity Release?

It is important to remember and accept that equity release in Scotland is not the only and best option for some people. This is why it is important to always be aware of the alternatives to equity release, and consider them carefully.

For lots of people, selling their home and downsizing to a smaller property might be the best option. This means that you will sell your current home for a large amount and buy a cheaper and smaller property.

For lots of people aged 55 or over, this seems like the best logistically option. It makes sense, right?

Lots of people aged 55 or over no longer live with children or grandchildren, so don’t need the three-bedroom, large home they once needed.

However, lots of people aged 55 or over have built up many memories in their home over the years, and simply do not want to sell.

As house prices are also on the rise, selling up might now mean moving out of the local area and away from family and loved ones who might live nearby.

Instead, you might want to look into a bank loan or credit card, which might charge you less interest on a loan depending on current interest rates as set by the Bank of England [4].

We outline the full costs associated with equity release here.

And it is also worth pointing out that budgeting your existing funds might be a better solution than applying for equity release. Below, we list organisations in Scotland that may be able to help you: