Equity Release2020-09-22T12:55:06+00:00

Equity release

Access some of the current value of your home tax free.

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What is equity release?

If you are over the age of 55, equity release allows you to access money that is tied up in the value of your home, and release the money as a lump sum or as instalments. We offer advice and guidance with lifetime mortgages, which allow you to release cash by taking out a loan secured against your home.

Add value to your home

Undertake those home improvements  or repairs you’ve longed to do and can add value to your property.

Early repayment

Repay your mortgage early to free up some retirement income.

Pay off debts

Pay off any outstanding debts to help reduce your monthly outgoings.

Treat yourself

Take that dream holiday of a lifetime or replace your car so it lasts through your retirement.

Get the right advice

We understand that equity release is a big financial decision and commitment as it’s tied to your home. It’s a valuable asset, and as well as providing a roof over your head, may also form a part of your estate.

There’s plenty to consider, so when wanting to learn more about equity release, it’s important to get specialist advice to help you decide if it’s the right option for you.

It all starts with a chat

This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.

Benefits of equity release

Equity release might be right for you, but it’s important to think about the advantages and disadvantages before making any important decisions.

You get to stay in your own home

Equity release can be seen as an alternative to downsizing. You can use the extra money to boost your pension pot.

You won’t have to make any monthly repayments

You won’t need to repay the loan or the interest until your home is sold when you die or move out permanently into residential care.

You’ll never owe more than the value of your home

Lifetime mortgages provided by members of the Equity Release Council offer a ‘no negative equity guarantee’. Ensuring no debt can be transferred to your family after your home has been sold.

You’ll have access to low interest rates

At the moment, equity release interest rates are at the lowest rate in five years. The Equity Release Council’s Spring 2020 Market Report found that two out of five equity release products available have rates lower than 4%*.

You can access the money when you need it

You can choose to take out a lump sum, or with a drawdown lifetime mortgage you can access smaller amounts of cash over time. You won’t be charged interest on the pot of money until you decide to use some of it.

You could avoid paying inheritance tax

Equity release can be a way for you to give your family a cash gift, avoiding inheritance tax. Inheritance tax rules can be very complex, so make sure you seek professional advice.

Frequently asked questions

Sharia law prohibits the concept of borrowing and paying interest on loans: conventional residential mortgages therefore present a problem for consumers who wish to observe Sharia law strictly.  In 2007 the Financial Services Authority (now the Financial Conduct Authority) expanded its rules to accommodate the concept of what it described as “home purchase plans” – which are compliant with Sharia law.

There are at present no Sharia-compliant lifetime mortgage products – since these work on the basis of interest being charged to the borrower’s account and rolled up for payment at the point where the property is sold.  Home reversion plans are more likely to be suitable for consumers who wish to release equity in a way which is compliant with Sharia law, since a proportion of the borrower’s property is sold, and there is no loan involved.

There are various methods of home purchase which are compliant – the main ones being

“Murahaba” and “Ijara”.  Basically they work like this:

  • Murahaba – the bank buys the property and sells it back to the customer at a higher price.  The customer then pays the higher price by way of paying equal instalments, over a fixed term;
  • Ijara – this is more common:  the bank buys the property and sells it back to the customer – on a leasehold basis – so the customer pays rent for a fixed period, at the end of which the (freehold) property becomes the customer’s.  The amount of rent paid each year is assessed according to market rates, not prevailing interest rates.

You may have lots of questions, depending on your own circumstances and one of our specialists would be happy to help answer these questions for you.

No. most providers will not accept static or mobile homes as suitable security – either for a standard mortgage or an equity release loan.

The equity release provider is accepting your property as security for its loan: this means that the provider needs to be satisfied that your property can be re-sold on the open market – either when you or your executors come to sell it or, in exceptional circumstances, if the provider has to take possession of it (because you have failed to comply with an obligation set out in your contract) and sell it.

Many lenders/providers ask questions in their application forms about your property’s age and how it is built (brick walls/roof slates or tiles and so on).  This is because some types of construction have in the past suffered structural defects.  This doesn’t mean that they are not safe to live in – but it has led some lenders and providers to decide not to accept them for mortgage/equity release purposes, because they are concerned that if there are problems in the future which need to be put right, this may affect the property’s value and its attractiveness to a future buyer.

Properties which are unlikely to be acceptable to equity release providers include:

  • Studio or basement flats;
  • Flats of maisonettes in a local authority or housing authority block of more than four storeys;
  • Retirement properties;
  • Static/mobile homes;
  • Houseboats;
  • Farms;
  • Hotels;
  • Guest houses/B&Bs.

Products which fully meet the Equity Release Council’s Product Standards are required to feature a “no negative equity guarantee”.  Put simply, this guarantee means that you, or more specifically, your estate will never owe more than the property is worth when it is sold.

Under your equity release plan, you have the right to live in your home until you need to move into a smaller property (whereby the plan may be transferrable), or move into permanent care, or until death. Your property will be sold and the sale proceeds will be used to repay the money owed to the provider of your plan. Any money left over, at the end of your plan, will be paid to you or your beneficiaries, in accordance with your Will.  In the unlikely event that the value of your house has decreased significantly, it is possible that it might not be worth enough to cover the amount which you owe.  The “no negative equity guarantee” means that if this turns out to be the case, the remainder of the loan would be written off.

How to get in touch

  • Simply complete the form here;

  • Check your inbox for a copy of your guide;

  • Give one of our equity release specialists a call on 01564 791 117 with any questions you may have after reading the guide.

It all starts with a chat

Read more about equity release on our blog

Start your equity release enquiry today

Speak to an adviser on which equity release plan is right for you. Request a callback to get started on your enquiry.

Get in touch

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