Frequently Asked Questions

The most common questions that our advisers receive regarding Equity Release are featured below. If you have any further questions, that have not been answered below, please submit an Equity Release enquiry form. Click the ‘Contact Us‘ button.

Equity release is a method of releasing wealth tied up in your property without the need to move home. With equity release products, you can either borrow against the value of your home or sell all/part of it for a regular monthly income, lump sum, or facility to draw equity at your discretion.

If you have an outstanding mortgage, it must be cleared in full either by using some of the proceeds from your equity release or from other funds. Once the mortgage has been redeemed, the remaining funds from your equity release can be used as you wish.

There are two main types of equity release plan on the market – lifetime mortgages and home reversion plans. Both are regulated by the FCA and are covered by the remit of the Equity Release Council Code of Conduct.

Equity release plans are not right for everyone. You should consider your options and receive independent financial advice before making a decision. However, if you do decide to use an equity release product, our advisers will ensure that you choose one that meets your requirements.

Taking an equity release plan is generally a long-term option.

Before signing for an equity release plan, you should research other alternatives. For example, if a large lump sum is the objective, re-mortgaging with the intention of capital raising may be more suitable. Or, if you cannot afford your current residence, many people consider downsizing. Downsizing is likely to give you maximum value from your home. However, equity release will allow you to live in your home, for the rest of your life, without the obligation of monthly repayments.

Ultimately you need to assess the pros and cons of all options. Our advisers are happy to assist with your assessment.

If you sign for a lifetime mortgage product, approved by the Equity Release Council, your policy will have a no negative equity guarantee. This is part of the Equity Release Council’s Code of Conduct for providers.

Upon death or, in the case of joint borrowers, the survivor moves into long-term care, the secured property is sold or remortgaged by your beneficiaries. The money raised is then used to redeem your lifetime mortgage. Any value remaining is passed to your beneficiaries. However, in the unlikely event that your property deflates in value, it is possible that the value of your home no longer meets the value of the equity release loan. The ‘no negative equity guarantee’, which all Equity Release Council members offer for their lifetime mortgage products, means that in this situation the remainder of the loan would be written off. Your beneficiaries would not be obliged to meet the surplus cost of your loan.

While costs vary from provider to provider, a rough estimate of the cost for setting up an equity release scheme is £1,500 plus an adviser fee. However, there may be offers from time to time that can reduce the cost of such fees.

The costs involved in setting up an equity release plan usually include:

  • Arrangement fee – to cover the provider’s costs of setting up the plan
  • Valuation fee – for the lender to assess the value of your security
  • Legal fees – to cover solicitor costs
  • Buildings insurance – a mandatory condition of your equity release offer

There may be other fees depending on the type of equity release plan. All fees will be disclosed in your key facts illustration.

If you are intrigued by equity release, we suggest that you contact our advisers to arrange a consultation. Your adviser will review your personal circumstances to see if an equity release plan is the most suitable option for you. This assessment will take into account other sources of funding that you may have, as well as any state benefit entitlements.

Based on this information, we will provide you with recommendations and a personalised key facts illustration. A KFI summarises all important details and gives a clear understanding of the costs involved. We suggest that you invite family members to attend the consultation.

If you are happy with the recommended product, the next step is to complete an application form. Our equity release advisers will assist.

A solicitor will be required to facilitate the transaction. We highly recommend that you select a solicitor that is experienced in equity release cases. The solicitor section of the member directory is ideal for finding specialist solicitors that are registered with the Equity Release Council.

The provider will instruct a RICS qualified surveyor to visit your home and produce a valuation report. A copy of the report may be sent to you and/or your solicitor.

Once the survey is complete and the amount you can borrow has been confirmed, an offer letter will be issued. All parties of the transaction will receive a copy of the offer. Your solicitor will thoroughly explain your offer letter. When you are happy to proceed, you and your solicitor will sign the acceptance form. This form declares that you understand the features and risks of the plan. Your solicitor will also be obliged to sign the Equity Release Council solicitors certificate. This will confirm that they have discussed the key points with you and that you understand the nature of the contract.

The chosen provider will then perform various legal checks in relation to the title of your property. Once this is completed, the cash is released to your solicitor who will arrange for the transfer of funds to your bank account.

Timescales will vary depending on the provider. However, as an average, from the day of case submission, 8-12 weeks should be expected for completion.

The amount you can borrow usually depends on your age, health and value of the property. A surveyor will be instructed by the provider to secure an accurate valuation of your property. If there are joint borrowers, the amount to be borrowed will be based on the age of the youngest applicant. If you are of ill health, you may be able to apply to release a larger portion of equity.

To qualify for a Lifetime Mortgage you need to be aged 55 and over. If you are taking out the plan with your partner, the age of the youngest borrower must be at least 55. For a Home Reversion Plan you must be a minimum of 60 years old.

An equity release plan could leave your family with little to no inheritance from the property upon your death. You and your family need to feel comfortable with this possible outcome.

You may be considering equity release to help family members acquire their first property, to pay for school fees, etc. In which case, the implications of releasing the equity in the short-term, and not having it to release in the long-term, need to be considered.

If you are married, in a civil partnership, or living with someone as a partner and you are both eligible by age, you can take out a joint equity release plan. Your spouse or partner will then have the right to live in the property for as long as they wish, should you die or move into long-term care. If you have a friend or tenant living in the home, the provider will require their signed consent to waive all rights to reside there once you die or move from the property.

If your plan is in joint names, your partner can continue living in the property under the same terms. If the plan is in your name only, unless the mortgage can be paid in full, the property will have to be sold. Under these circumstances, your partner will have to find somewhere else to live. It is normally a requirement that the plans are written in joint names from the outset to ensure that both parties have security of tenure.

In the case of remarriage or cohabitation after a plan has been taken, you must inform your provider. It may not be possible to add your new partner to the plan. In which case, they will not have security of tenure.

If you repay a lifetime mortgage early you may be liable for extra charges called early redemption charges. A full explanation will be covered in the key facts illustration.

Most equity release plans are intended as long-term options. Inform your adviser at the time of taking out the plan if you are considering repaying the loan at an early stage. There are products available with specific periods of early repayment penalties. However, some products have no such penalties.

The use of an equity release scheme will reduce the value of your estate. You should speak to your financial adviser, who specialises in estate planning, if you are considering using equity release for this purpose.

If the provider is sold to another company, the other company will take on the portfolio of agreements. The terms of your agreement will be unaffected. Changes will only occur if they are specified in your contract.