How equity release works – the process

For some, equity release can still sound a little daunting. As it’s a financial solution that is only available through specialist brokers, it’s understandable that you may not know where to turn for advice. Read our step-by-step guide to find out how it

Step 1

Have an understanding of what you would like the money for. With equity release the lowest amount that you can release is £10,000 and the maximum amount is dependent on the age of the youngest homeowner and the value of your property.

Specialist equity release broker, Age Partnership, said that their clients used equity release to carry out home improvements and give a gift to friends or family, amongst lots of other things.

Once you’ve paid off any outstanding mortgage that you may have, the money that you release is yours to spend.

Step 2

Contact a specialist broker who is qualified to offer equity release advice. The Equity Release Council hold a list of all of their members who are qualified in this specialist financial solution, which is only available to homeowners aged 55 and over.

Some advisors are tied to particular lenders, but a whole-of-market broker, such as Age Partnership is able to offer advice coving all available 698 plans on the market. It can use this whole-of-market information to recommend a suitable plan based on the requirements you’ve discussed.

Step 3

Organise a quotation to discuss your borrowing needs. Some brokers will provide a quote free of charge and without any obligation for you to proceed. With Age Partnership, only if you choose to proceed and your case completes would a typical fee of £1,795 be payable.

Step 4

Your advisor will help you understand all of your options. They will also ask you to consider alternative methods for accessing the funds that you’re looking for, such as downsizing to a smaller property. As part of the free equity release quotation the advisor will provide you with a personalised illustration which outlines the features and risks involved. It’s your advisor’s job to ensure that you’re fully informed about all aspects of equity release including the effect it will have on the amount of inheritance you can leave and if your entitlement to meanstested benefits could be affected both now and in the future.

Your advisor will also explain that the money you release, plus accrued interest, will be repaid upon death or moving into long-term care and that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property.