What is equity release?
Equity Release is a type of mortgage that lets homeowners aged 55 and over release tax-free cash from the value of their home. The amount you can borrow is mostly based on your age and how much your home is worth, rather than a multiple of your income.
You can use the money for any legal reason you choose (except for investment purposes), so you could:
- Help your children buy or improve their own home
- Book that holiday of a lifetime or buy that dream sports car
- Pay for home improvements
- Put aside some extra money to help you enjoy your retirement
Unlike a traditional mortgage, there is no maximum age at the end of term and you won’t need to pay off the mortgage until the last surviving borrower passes away or moves out of the property into long-term care. The loan is then usually paid off from the sale of your home.
How it works
You don’t need to make any monthly repayments (unless you want to) and interest is added each year to the initial loan amount and to any interest previously added.
All equity release providers offer a “no negative equity” guarantee. This means that the money you’ll eventually need to pay back will never be more than the total value of your home.
Are you eligible?
To apply for a lifetime mortgage, you’ll need to:
- Be aged 55 or older
- Own a home within the UK worth £75,000 or more.
- Want to borrow at least £10,000.
- Live permanently in your home. The property must be your main residence and shouldn’t be unoccupied for more than six months at a time.
- Be mortgage-free or be paying off any existing mortgage with the money you receive.
Benefits of releasing equity:
- The money you release is completely tax-free.
- Interest rates are very competitive and are usually fixed for the lifetime of the mortgage
- You can stay in your home rather than downsizing or moving to a cheaper area to release some money.
- All lenders offer a no negative equity guarantee so you’ll never owe more than the value of your home when it’s sold.
- There’s no need to repay the loan until you pass away or move out of your home and into long-term care.
- If you wish to repay some of your loan early, there are flexible repayment options for you to choose from.
- After taking equity release, you can still move house providing the new property meets the lender’s criteria at that time.
- You can choose to ring-fence a proportion of the value of your home to ensure a legacy for your estate. (Choosing this option will potentially reduce the amount of borrowing available to you.)
You might want to carefully consider:
- If you gift some of the money to family, they might have to pay Inheritance Tax in the future.
- Interest on a Lifetime Mortgage is calculated daily and added to the amount you owe each month. This means that the amount you owe will increase over time, reducing the equity left in your home.
- The inheritance you leave will be reduced.
- If you pay back some of the loan early, you may be subject to an Early Repayment Charge.
- Releasing equity may impact your entitlement to means-tested state benefits.
How to apply
Get expert advice
iMAB have expert equity release advisers who will sit down with you to review your current situation and future plans. They will talk you through all the options, highlighting the benefits, as well as the costs and risks.
Think it over
Once you have spoken to our adviser you should discuss your plans with your family and decide whether an Equity Release mortgage is right for you.
If you decide to go ahead, your adviser will confirm the most suitable product and lender and will help you complete the application form.
Once your application has been reviewed, the chosen lender will then arrange an independent valuation of your home. You will then receive a formal written offer which will confirm the amount you can borrow and all the terms and conditions.
A copy of this offer will be provided to your nominated solicitor who will advise you on the legal paperwork before you sign to accept the mortgage.
Get in touch
Our team of friendly advisers are on hand to answer any questions you may have.
Would you like to give us a little more detail about your enquiry? Or would you prefer to arrange a face to face appointment? Send us an email and one of our advisers will be in touch.
Book an Appointment
You can book a video or telephone appointment via our online diary system. Or, if you would like to speak to a specific adviser, you can contact them through the Our People page. Face to Face appointments are also available. Please contact us for details.
Do you have a quick question or would you like to arrange a face to face appointment? Give us a call and we’ll be happy to help.