What is equity release and do I qualify?

Equity release can be a great solution for homeowners who are typically 55 years-old and over, and wish to unlock some of the cash in their property. This can be for any legal purpose, such as repaying your existing mortgage or unsecured debts, providing cash gifts to your loved ones, making home improvements, improving your standard of living or enjoying your wealth and taking some holidays. You can take a lump sum or receive payments in stages, to suit your plans, with no monthly repayments necessary.

At Mortgage Studio, we put you and your family at the centre of everything we do. Firstly, we help you understand whether equity release is right for you or whether there are other options.

If you’re under 55 and looking to unlock some of your property’s cash, have a look at our remortgages section.


How does equity release work?

There are two types of equity release:

Lifetime Mortgage – means you borrow the funds, and when you die or move into long-term care, the loan is repaid from your estate. This is the most popular option, as you retain ownership of the property.

The interest is rolled up into the loan, so there are no monthly repayments necessary. If you don’t want interest to be rolled up, you can make regular payments to cover the interest, ensuring the amount owed stays the same. If you’re not sure what this means, get in touch and we’ll explain everything clearly and without the jargon!

Home Reversion Plans – available for those over 65. This means selling your home, or a portion of it, to the loan provider. In exchange you receive the funds and the right to remain in the property until you die.

You’ll be able to release more of your equity with these, but there are some additional things to consider:

  • You’ll no longer own 100% of your home, so your estate won’t benefit from all of the house price growth.
  • It can be difficult to reverse the deal, as you’ll have sold all, or part, of your home.

Because you’ll get less than the current market value, if you die soon after, you’ll have sold the property cheaply, impacting your estates and inheritance to your loved ones.

The main benefit is likely to be the higher amount of funds you can release.


Understand equity release and make the right choices

We’re whole-of-market mortgage specialists and we hold the specialist qualifications required to advise you on equity release. This means we’ll help you consider the alternatives to equity release first. This could include conventional mortgages, selling your home and downsizing, using other savings and investments or asking for help from friends or family.

We welcome family members to be present during our consultation, as equity release can affect their inheritance. Of course, we’re happy to run through the options separately. We’ll take the time to ensure you understand all aspects, without rushing into anything.

Get in touch with our independent mortgage adviser – we’ll be happy to help.