What is equity release and could it be right for you?

2020 was a difficult year for us all, with many businesses having to change the way they work in order to keep providing a professional service and helping people. The equity release market was no different.

After a period of adjustment equity release brokers and lenders adapted, enabling homeowners aged 55 and over to once again release tax-free cash from their homes. And what’s more, some leading lenders are offering some of the lowest interest rates we have seen, meaning it could be a good time for many to explore new financial options.

What is equity release?

Equity release allows you to release money from your home whilst still continuing to live in the property. The money that you release is tax-free and you can choose to access it as a lump sum or as smaller amounts over time – whichever works best for you. The amount of money that you can release is determined by the age of the youngest homeowner and the value of your home. There is no requirement to make monthly repayments if you don’t wish to, as the money that you release, plus the interest that you accrue, is repaid when you die or move into long-term care.

How do I know if I’m eligible?

There are three main stipulations that you should meet in order to qualify for equity release. You must be aged 55 or over You should own your own home Your home must be worth at least £70,000.

What does it involve?

Equity release may involve a home reversion plan, or a lifetime mortgage which is secured against your property. A lifetime mortgage is the most popular form of equity release and with this option you continue to own 100 per cent of your home. As equity release is a specialist financial solution you should seek independent financial advice. To understand the features and risks, ask for a personalised illustration. Equity release requires paying off any existing mortgage.