What does it mean to release equity from your home?
Equity release refers to a range of products letting you access the equity (cash) tied up in your home if you are older. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.
What is the downside of equity release?
The main disadvantage of equity release is that it does not pay you the full market value for your home. You will receive far less money than you would from selling the property on the open market – although of course in that situation you would still have to find somewhere else to live.
Can equity release be a good thing?
Is equity release a good thing? Equity release can be a good idea for older people who would like to gain some extra cash in retirement. Equity release can help you make home improvements, pay for the costs of care, help a loved one who is struggling financially, or pay off other debt.
What happens when you release equity?
Equity release unlocks the value built up in your home as a tax free lump sum. There’s no need to move out and you’ll still own your home. With equity release you don’t have to make monthly payments, unless you choose to. It’s usually repaid when the last borrower moves into long term care or dies.
What is equity release on your house?
Equity release is a way to unlock the value of your property and turn it into cash. You can do this via a number of policies which let you access – or ‘release’ – the equity (cash) tied up in your home, if you’re 55+. You don’t need to have fully paid off your mortgage to do this.
What’s the catch with equity release?
Equity release plans provide you with a cash lump sum or regular income. The “catch” is that the money released will need to be repaid when you pass away or move into long term care. With a Lifetime Mortgage, you will owe the capital borrowed and the loan interest accrued.
Can I sell my house if I have equity release?
Yes, you can sell your house if you have equity release. An equity release product, such as a lifetime mortgage, can be repaid at any point and by any means.
Do you pay back equity release?
All equity release plans need to be repaid upon the death of the last borrower, or when the borrower enters long term care. But what if you wish to repay before this? You can repay equity release early at any time, but you may be charged a penalty for doing so, in the form of an Early Repayment Charge (ERC).
What is the maximum age for equity release?
Equity release plans are available to homeowners from age 55, and there is no upper age limit. Not all providers lend at all ages, but most plans are available to applicants aged 60 to 85.
How long does an equity release take?
around eight weeks
It usually takes around eight weeks for an equity release application to complete and for you to receive your funds. Some applications complete in as little as three weeks; however, some complicated cases can take many months.
Why would I be refused equity release?
The lender ranked the top 10 reasons for an application decline. They were flat roofs, proximity to a commercial property, non-standard construction, flood risk, single skin construction, ex-local authority, clutter inside the house, asbestos, proximity to electricity and spray foam under the roof.
What is the minimum age for equity release?
55
What is the minimum age for equity release? Typically, the minimum eligible age for equity release is 55. For joint equity release mortgages this applies to the youngest applicant.