Equity release guide
What Can You Use Equity Release For?
Common reasons homeowners may consider releasing equity
Equity release may allow eligible homeowners to access money tied up in their property, usually through a lifetime mortgage. It is a significant decision and should be reviewed carefully with advice before proceeding.
Equity Release And Lifetime Mortgages
Equity release is a broad term for products that may allow homeowners, usually later in life, to release money from their property. A lifetime mortgage is one type of equity release and is secured against your home.
The amount that may be available can depend on your age, property value, property type, health, lender criteria and product terms. Some people may choose a lump sum, a drawdown facility, or a combination of both, depending on their needs and the options available.
Important Equity Release Warnings
- Equity release may reduce the value of your estate.
- Equity release may affect entitlement to means-tested benefits.
- Interest may roll up over time.
- Early repayment charges may apply.
- Equity release is not suitable for everyone.
- Advice is important before proceeding.
Common Reasons People May Consider Equity Release
People consider equity release for different reasons. The examples below are general and do not mean equity release will be suitable. Every decision should be weighed against the costs, risks, family circumstances and possible alternatives.
Home improvements
Funds may be considered for repairs, adaptations or improvements to the home, subject to advice and product terms.
Repaying an existing mortgage
Some homeowners may consider equity release to repay an existing mortgage, including an interest-only mortgage, but the long-term cost needs careful review.
Helping family
Some clients may want to support family with deposits, education or other needs, while understanding the possible effect on their estate.
Supplementing retirement income
Equity release could provide additional funds in later life, but released money and savings may affect means-tested benefits.
Buying or moving home
Some people may use a lifetime mortgage as part of a later-life purchase or move, subject to property suitability and lender criteria.
Care or later-life needs
Funds may be considered for care, home adaptations or later-life planning, depending on the circumstances and product terms.
Home Improvements
Home improvements are one of the reasons homeowners may explore equity release. This could include repairs, accessibility changes, a new kitchen or adapting the property for later-life living. The suitability of using equity release for this purpose depends on your wider finances and future plans.
Repaying An Existing Mortgage
Some homeowners use equity release to repay an existing mortgage, particularly where an interest-only mortgage is approaching the end of its term. This can reduce or change monthly commitments, but interest may roll up and the amount owed can increase over time.
Helping Family
Equity release may be considered by clients who want to help children or family members. This should be discussed carefully because it may reduce inheritance and could affect the value of your estate.
Retirement Income And Later-Life Needs
Some people consider equity release to support retirement income, fund care, or make their home more suitable for later life. Advice should include the possible effect on benefits, tax position, product terms and alternative options.
Speak To An Adviser Before Deciding
Equity release is not suitable for everyone. A qualified adviser can explain how the product works, what alternatives may exist, and how the decision could affect your estate, benefits, family and long-term plans.
Helpful Equity Release Links
Continue reading with these related Mortgage Hive guides.
Need Equity Release Advice?
Speak to The Mortgage Hive about whether equity release may be suitable for your circumstances.