Your questions about equity release

Equity release is a way for you to release cash locked up in your home to spend as you wish. There are currently three types of equity release plan on the UK market known as lifetime mortgages, drawdown lifetime mortgages and home reversion plans. Each plan comes with its own benefits and drawbacks. An equity release adviser will be able to explain the plans in full to help you decide which one suits your individual circumstances.

Once you have taken out an equity release plan, you are able to remain in your home until you and your partner pass away or move into long term care. The loan plus interest accrued is repaid in full to the equity release provider upon your entry into long term care or when you and your partner pass away. If you have taken out a home reversion plan, the percentage of the property you sold will revert to the provider.

To qualify for an equity release plan you must be aged 55-95 and own your own home in the UK worth at least £50,000. You can find out how much you could release today through our free equity release calculator.

If you take out a lifetime mortgage you will remain the owner of your home. However, if you take out a home reversion plan, your property will be owned by the home reversion company who you sold your house to in order to release the cash from your property. Both of these types of plans allow you to remain in your property until you and your partner pass away or move into long term care.

All equity release schemes will reduce the amount you leave as an inheritance; however there are plans available which allow you to guarantee an inheritance to your loved ones when the plan comes to an end.

For example, if you take out a home reversion plan and sell less than the full value of your home, you will be able to guarantee this part of the property as an inheritance to your family from the sale of the property. This percentage will be paid at the end of the plan when you and your partner pass away or move into long term care.

An equity release plan is intended to last for the rest of your life; however there are ways in which you can repay the plan back early. If you take out a home reversion plan, you can buy back the reversion company’s share of the property; however you will have to pay the full market value for the property. This is most likely to be more than the amount you received when you originally sold your house to the provider.

If you have taken out a lifetime mortgage and wish to repay earlier than planned, you will have to pay off the full amount, including the loan and interest accumulated. There may be an early repayment charge. You should check this before you proceed with any type of plan.

APR stands for Annual Percentage Rate. This can be used to compare the cost of different lifetime mortgages from different lenders. This rate looks at the interest rate as well as all the charges and costs you have to pay, for example the arrangement fees and the valuation fees. This allows you to compare the overall costs of different lifetime mortgages when it comes to choosing your plan.

Yes. Equity release providers allow you to release cash from your home if you have an outstanding mortgage on your property; however all providers would expect you to use the cash you release to pay off the outstanding mortgage owned.

If you have already taken out an equity release plan then you may be eligible to change to a more competitive plan. Read more about changing your equity release plan to see whether you qualify.

This depends on the type of care you move into. If you live in your home and receive domiciliary care, then the equity release plan will continue allowing you to remain in your home until you pass away.

If you move out of the property into a care home, the equity release plan will come to an end meaning your house will be sold and the debt will be repaid in full to your provider. If you are a couple and only one of you moves into care, your partner can remain in your home until they pass away or move into long term care too.

Yes. The money released would be free of both Capital Gains Tax and Income Tax. However; any interest accrued on the amount released may potentially be liable to tax.

A drawdown lifetime mortgage allows you to release the cash in stages as and when you need them, which means the interest only accrues on the money you release and not the whole lump sum you originally agreed.

This depends upon what your Will says about your property. If you have stated monetary values to be passed onto your beneficiaries once your property is sold, then it would benefit to change the wording as there may not be sufficient equity left in the property once your provider has been paid.

If your will simply states that any remaining money from your home will be passed onto your beneficiaries then there should be no need to alter it.

You can contact our Wills team today to help you with your Will or to arrange your Lasting Power of Attorney. Contact our team today on 0800 915 0405.

There are a few providers who will allow you to release money on second homes, providing they are in England, Scotland, Wales or Northern Ireland.

Yes it is often possible to top up your existing equity release plan, or swap your equity release plan and release more cash.

Yes, we can compare your current equity release plan with others on the market and tell you the options available. We can make switching equity release plans hassle free by helping you with the paperwork and liaising with your equity release provider and solicitor.

As the name suggests, a lifetime mortgage is meant to last for the rest of your life and is not designed to be repaid early. It is possible to repay the loan early but there is almost always an early repayment charge to pay. This can apply for the duration of the loan or a specified number of years.

If your new spouse qualifies for equity release then it is normally possible to add their name onto the equity release plan, subject to lender criteria, or your spouse may need to sign a waiver of entitlement. Ask your independent equity release adviser.

It is possible to remove parties from an equity release plan; however, whether it is possible to do so will be subject to provider criteria.

The equity release plan will continue until the death of the last surviving partner so you will be able to stay in your home for the rest of your life.

Yes. Key recommends plans that are approved by SHIP (Safe Home Income Plans) and all plans approved by SHIP allow you to move home if you wish. The move is subject to provider criteria, which can differ between providers.