Is Equity Release right for me?

Equity Release is certainly not the right product for everyone but it can be a great solution given the correct situation. This website will hopefully provide you with answers to your questions, but we encourage you to pick up the phone and speak with us. If we feel that it is not appropriate for your circumstances then we will tell you.

Will I still own my home?

Yes, a Lifetime Mortgage is a mortgage secured against your property in the same way as you may have had a standard mortgage in the past or at present. You are not selling your property and any equity belongs to you during your lifetime, or to your Estate on death.

I currently have an Interest Only mortgage coming to an end. What can I do?

You can take out a Lifetime Mortgage to replace your current Interest Only mortgage. Whilst all products allow you to make no monthly interest payments and instead have the interest added to the loan, some modern plans allow you to continue to make the full interest payment in the same way as you do now. Therefore the debt will not increase. However, you have the flexibility to make a lesser payments or make no payments at all. As an alternative, some plans allow you to make capital payments of up to 10% of the loan amount per annum. These payments can be made on a regular monthly basis or ad hoc throughout the year.

But I don’t want to make monthly payments….

There are plans that will allow you to make interest or capital payments but you do not have to do this. If you make no payments at all then the interest is added to the loan each month and the loan plus the accrued interest is repaid either on sale during your lifetime or on death or on entering long term care.

I have heard that they are very expensive….

Only a few years ago it was common for the interest rate on Lifetime Mortgage to be in the region of 7% to 8%. If the interest was added to the loan at these levels then the total debt would accelerate at a fast pace. Interest rates did increase sharply in 2022 although they have started to reduce and today you can obtain plans with interest rates around 5.45%. Interest rates are generally fixed for the life of the loan.

I've read that these are bad products....

The Lifetime Mortgage industry has improved significantly over the years. The product is much more tightly regulated today which gives the consumer much better protection. The products themselves have become much more flexible and cheaper than only a few years ago and for the right situation they are an ideal solution. However, they do not suit everyone so please contact us to discuss your situation.

Do I need a solicitor?

Yes, this is a requirement with all Lifetime Mortgages that we recommend. A solicitor is required to ensure you receive completely independent legal advice about the risks, rewards and obligations attaching to an equity release plan. They will also carry out the conveyancing required to ensure that your new equity release lender is able to secure a first legal charge against your property and that any existing secured borrowing has been (or will be) repaid.

I only want a small loan….

Many modern Lifetime Mortgage products allow you to take a small amount from the outset, say £5,000, then have a ‘drawdown’ facility whereby you can take further amounts in the future should you need them. You are only charged interest on the amounts that have actually been drawn upon. This is more favourable than taking a large amount that you do not necessarily need now and just leaving it in the bank earning very little or no interest.

I want to make a gift to my children or grandchildren….

Many people take out a Lifetime Mortgage in order to make a gift to children or grandchildren, for example to help with a property purchase, a business venture or to assist with financial difficulties.

What other purposes can I take out a Lifetime Mortgage for?

There a many reasons you might consider a Lifetime Mortgage. The most common ones are : gifts to children and/or grandchildren, repay existing mortgage/other debts, home improvements, holidays, purchase of a new car, reduce an Inheritance Tax liability. There a plenty other reasons so please call us to discuss your situation.

Will a Lifetime Mortgage affect my State Benefits?

If you take out a Lifetime Mortgage and keep the capital in, for example, a savings account then these savings could be taken into account when you are assessed for any ‘means tested’ benefits such as Pension Credit or Council Tax Benefit. Please speak with us if you have any concerns in this area.

What if I want to repay the loan early?

Lifetime Mortgages are not designed to be repaid early. Should you do so then there may be an Early Repayment Charge in the same way as if you repaid a standard mortgage during a Fixed Rate period. However, there are instances when you would not need to pay an Early Repayment Charge, such as making overpayments, or on downsizing property, or on the death of the first borrower (for joint plans only). Lenders have varying terms and conditions so it is best to speak with us for further information.

I own a non-standard property....

All lenders have criteria which determines whether or not they will lend on a particular property. For example, some lenders do not like property contructed with a timber frame, or with a flat roof, located close to commercial premises or with an age restriction like a retirement home. Therefore, when discussing with your adviser it is important for them to know such details so that they can recommend the most appropriate lender.

What if I move property?

You can move the Lifetime Mortgage to a new property should the new property be acceptable to the lender. If you are downsizing then you may have the opportunity to repay the Lifetime Mortgage in full without penalty. Again, lenders have varying terms and conditions so it is best to speak with us for further information.

What about Negative Equity?

If the Lifetime Mortgage lender is a member of the Equity Release Council then your plan will be contain a ‘no-negative equity’ guarantee that your beneficiaries will never be liable for any shortfall should the loan exceed the sale price of your property. If there is a shortfall then the lender will write this off. We only recommend plans that have this guarantee.