What is Equity Release?
Understanding Equity Release
If you’re approaching retirement or already retired, you may have come across the term Equity Release and wondered what it means. With a variety of products and options available, it’s important to understand how Equity Release works and the factors that should be considered before making any decisions.
This guide answers some of the most frequently asked questions about Equity Release, Lifetime Mortgages and Later Life Lending, helping homeowners gain a better understanding of the options available.
What is Equity Release?
Equity Release is a way for eligible homeowners aged 55 and over to access some of the value tied up in their property whilst continuing to live in their home.
The most common form of Equity Release is a Lifetime Mortgage. The amount that may be available will depend on a range of factors, including age, property value and lender criteria.
As with any financial arrangement, it is important to understand how Equity Release works, as well as the potential implications and alternative solutions that may be available.
How Does a Lifetime Mortgage Work?
A Lifetime Mortgage is secured against a property and is typically repaid when the last remaining borrower passes away or moves into long-term care.
There are different types of Lifetime Mortgage products available, each with their own features and criteria. Depending on the product selected, borrowers may have different options available to them regarding repayments.
Professional advice is required before proceeding with Equity Release, helping homeowners understand the options available and the implications of each solution.
Does the Lender Own My Home?
No.
One of the most common misconceptions about Equity Release is that the lender takes ownership of the property.
With a Lifetime Mortgage, homeowners retain ownership of their home. The mortgage is secured against the property, similar to other forms of mortgage lending.
Understanding the facts behind Equity Release is often the first step in helping homeowners explore and understand their available options.
What Can Funds Released From a Property Be Used For?
Homeowners seek information about Equity Release and Later Life Lending for a variety of reasons.
Examples may include:
- Home improvements
- Repaying an existing mortgage
- Increasing financial flexibility in retirement
- Helping family members financially
- Funding later-life care needs
- Exploring alternatives to downsizing
The reasons will differ from person to person and should always be considered alongside an individual’s circumstances and objectives.
Does Equity Release Affect Inheritance?
Equity Release, Lifetime Mortgages and Home Reversion Plans will reduce the value of an estate and may affect the inheritance left to beneficiaries.
For this reason, many homeowners choose to involve family members in conversations regarding later-life financial planning and lending decisions.
Understanding the potential impact on beneficiaries is an important consideration when exploring available options.
What Are the Alternatives to Equity Release?
Equity Release is not the only option available to homeowners.
Depending on individual circumstances, alternatives may include:
- Downsizing to a smaller property
- Extending an existing mortgage term
- Retirement Interest Only Mortgages
- Traditional mortgage solutions
- Using existing savings or investments
A key part of the advice process is exploring the available options and understanding how different solutions work.
When Do Homeowners Typically Seek Later Life Lending Advice?
Homeowners may seek information about Later Life Lending for a variety of reasons including:
- Being aged 55 or over
- Wanting to remain in their current property
- Requiring access to additional funds
- Approaching retirement or already retired
- Exploring alternatives to moving home
- Wanting to understand the options available to them
Seeking advice can help individuals gain a clearer understanding of the solutions available and the factors that should be considered.
Frequently Asked Questions About Equity Release
Can I move house if I have Equity Release?
Some Lifetime Mortgages may be portable, allowing borrowers to move to another suitable property, subject to lender criteria and approval
Will Equity Release affect means-tested benefits?
It may do. Accessing funds through Equity Release can affect entitlement to certain means-tested benefits.
Is Equity Release my only option?
No. Depending on your circumstances, alternative solutions may be available. Understanding all available options is an important part of the advice process.
Is professional advice required?
Yes. Equity Release is a regulated product and professional advice is required before proceeding.
Is Equity Release the same as a Lifetime Mortgage?
A Lifetime Mortgage is the most common form of Equity Release, although other options may also be available depending on a homeowner’s circumstances.
Important Information
Equity Release, Lifetime Mortgages and Home Reversion Plans will reduce the value of your estate and may affect your entitlement to means-tested benefits.
There may be alternative solutions available depending on your circumstances. Professional advice should always be sought before making any decisions.
Equity Release Advice Across Kent
At Later Life Financial Advice, we support homeowners across Sandwich, Canterbury, Thanet, Broadstairs, Ramsgate, Deal, Dover, Ashford and the wider Kent area with information and advice on Equity Release, Lifetime Mortgages and Later Life Lending.
Our approach is centred around education and understanding. We take the time to listen to your circumstances and explain the available options, helping you gain a clearer understanding of the choices available to you.
If you would like to learn more about Equity Release, Lifetime Mortgages or Later Life Lending in Kent, you can explore our website for further information or get in touch with our team for a free initial consultation via the button below.
*Estate planning is not regulated by the Financial Conduct Authority.
