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Everything you need to know about Equity Release
What is an Equity Release Mortgage?
Equity release more recently known as a lifetime mortgage is the act of releasing money that is held within the value of your property while you're still living there. It can help homeowners over the age of 55 to raise money to achieve a variety of goals. We are here to help you decide if this is right for you.
Is it Right for Me?
Equity release may not be the ideal financial product for everyone, as its suitability depends on your unique circumstances and financial goals. Our knowledgeable advisers will assess your situation and provide personalised guidance.
Are there Monthly Repayments?
Are there Monthly Repayments?
One of the flexible aspects of equity release is that it can eliminate the need for monthly repayments depending on the life time mortgage option chosen. This can ease the financial burdens for retirees. The interest on the mortgage is therefore rolled up with the property providing security to the lender which will repay the debt. The option to make repayments or service the interest are available depending on the plan chosen and our adviser will explain the choices available to you
Is it Taxable?
The money you release from your home through equity release is entirely tax-free, which can be a significant financial benefit to homeowners seeking additional funds.
Who Owns My Property?
With a lifetime mortgage, you maintain full ownership of your property, guaranteeing your right to reside in it for the rest of your life, offering peace of mind and financial flexibility.
Is it Regulated?
It's important to note that equity release lending is closely regulated by the Financial Conduct Authority (FCA), ensuring consumer protection and industry standards.
Some frequently asked questions covering later life lending and equity release mortgages...
What products make up later life lending?
Later life lending is made up of traditional mortgages, retirement interest only mortgages and equity release (lifetime mortgages).
Why would current homeowners look to use later life lending?
Later life lending is used by homeowners for a number of reasons including :
- Repaying an existing mortgage
- Home improvements
- Increasing standard of living/income
- Helping family by gifting funds
- Consolidating borrowing to make outgoings affordable.
- Paying for home help or care.
- Purchasing a vehicle.
Do homeowners need to have a current mortgage?
No, they do not need to have a current mortgage.
Does the current mortgage need to be repaid?
Yes. As these mortgages are first charge mortgages the current mortgage will need to be repaid either via the new mortgage or the borrower’s own funds.
Is proof of income or an affordability assessment required?
For traditional mortgages and retirement interest only mortgages, an affordability assessment is required with proof of income required. For lifetime mortgages there is no affordability assessment or requirement to prove income.
Are monthly payments required?
Traditional mortgages and retirement interest only mortgages both require monthly payments to be made. Lifetime mortgages do not require monthly payments to be made but clients can choose to make full or partial payments subject to the lender terms. Our advisers will help you select the right mortgage for you.
What happens to the interest on lifetime mortgages if the interest is not repaid?
Lifetime mortgages allow “roll up” of interest. This means that each month interest is added to the amount borrowed and at the end of the mortgage the amount owed will be the total of the amount borrowed plus the rolled-up interest.
How are the mortgages repaid?
Traditional mortgages will need to be repaid by the borrowers at the end of the agreed term. Retirement interest only mortgages and lifetime mortgages are repaid on death or entry into long term care of the last borrower usually by the sale of the property.
Do retirement interest only mortgages and lifetime mortgages have to be repaid by the sale of the property?
Not necessarily. Many lenders will allow the outstanding balance to be settled from other funds not just by the sale of the property.
Can the mortgage be repaid early?
Yes, all later life mortgages can be repaid early, however early repayment charges are likely to apply.
Can overpayments be made?
Yes, all later life mortgages come with the ability to overpay. Each lender will have different rules around how much and how often overpayments can be made. Our adviser will discuss this with when choosing the right lender for your circumstances.
What is the no negative equity guarantee?
The majority of lifetime mortgages come with a no negative equity guarantee. This means that at the end of the term, the amount to be repaid can be no greater than the value of the property. We would only recommend lenders that provide this guarantee.
Does taking out an lifetime mortgage affect my beneficiaries inheritance?
Inheritance rules can be complex. Our advice procedure will take into account the interests of beneficiaries. We welcome the involvement of your beneficiaries if this is something you’re concerned with when looking at equity release, as many plans do have ring-fenced amounts for inheritance.
Can equity release negatively affect me?
If you’re receiving means-tested state benefits, releasing equity from your property may affect this. We can discuss this with you in further detail during the advice process – should it be applicable to you.
What happens if I want to move home?
Subject to the lender chosen and their criteria the existing mortgage may be portable, meaning you can move your existing mortgage to a new home. This is subject to the new property meeting the requirements of the lender. We are able to discuss this with you to ensure a lender is chosen who supports porting your mortgage if required.
What are the costs involved?
These can vary by product but include:
- Valuation fee – to carry out a survey on the property to establish that it is suitable for lending purposes. Some lenders offer a free valuation.
- Arrangement fee – charged by the lender for arranging the mortgage or fixed rate. These can normally either be paid up-front, added to the loan or deducted from the advance.
- Legal fees – costs for carrying out the legal work involved in either the purchase or re-mortgage activity.
- Adviser fees – An advice fee will be charged for researching the market and arranging your mortgage.
How Can I Use the Funds Raised from My Equity Release?
You can use it in lots of ways…
How much equity you can release from your property?
⚬ Free Calculation ⚬ Financial Specialists
We’re proud to work with such reputable lenders…
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage. Some buy to let mortgages are not regulated by the Financial Conduct Authority.
Equity Release, Lifetime Mortgages & Home Reversion plans will reduce the value of your estate and can affect your eligibility for means tested benefits.
Later Life Financial Advice is trading style of Kent Financial Consultants Limited who are registered in England and Wales.
Registration Number: 12830348.
Registered Address : 64 High Street, Broadstairs, Kent, England, CT10 1JT.
The guidance and/or information contained within this website is subject to the UK regulatory regime, and therefore targeted at consumers based in the UK.
Later Life Financial Advice is a trading style of Kent Financial Consultants Ltd which is an appointed representative of Quilter Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Quilter Financial Services Ltd is entered on the FCA register under reference 440718.
