Equity Release Schemes

Equity is the difference between any mortgage you may have and the value of your home. Equity release is a way of unlocking the value of your property, without having to move home. It is used mostly by older homeowners who either have paid off their mortgage altogether or have only a small amount left to pay.

You can release the value of your home to give yourself a lump sum or a regular income (or both). If you live in the property until you die, the money from its sale is used to pay the lender before anything left over is paid to your beneficiaries. If you sell the property before you die, you repay the money you borrowed from the lender. With some types of loan you might also have to make regular interest payments.

This booklet gives some basic information about equity release and tries to answer some of the questions you should ask yourself and your advisers if you are considering this option. But this booklet is not a full guide, so if you are considering equity release you should also get expert financial and legal advice. Equity release can also affect the amount you are able to leave to your family or other beneficiaries after you die, so you may also want to talk through your plans with them.

How can I release the equity in my property?

There are two main ways you can do this either by:

Taking out a mortgage (Lifetime Mortgage)
There are special types of loans, usually designed to run for the rest of your life, called lifetime mortgages. You borrow money secured against the value of your home to give you a lump sum or a regular income. The loan is repaid to the lender when your property is sold. You continue to own your home.

Lifetime mortgage: Client takes out a loan secured on their home, as a lump sum or income (or both). The loan is repaid from the proceeds of the sale of the home when the client dies or moves out (perhaps into a care home). The client continues to own their home whilst they live in it. Clients can choose from a home income plan, interest only mortgage, a ‘roll-up’ mortgage or a fixed repayment mortgage.
Home income plan – loan taken for cash and used to buy an annuity part of which is used to pay the mortgage.
Interest Only – same as normal mortgage.

Selling your home or part of it (Home Revision)
This is normally called a reversion or part reversion scheme. You sell your home, or a part of it, to a reversion company that allows you and your partner to continue to live there for the rest of your lives. After you both die, (or move out for whatever reason) the proportion of your home that you sold becomes the property of the reversion company. Anything left over passes to your estate.

Home reversion: Client sells all or part of their home to a third party, normally a reversion company or individual (looking for investment). This means all or part of the home belongs to somebody else. In return, the client receives a regular income or cash lump sum (or both) and they continue to live in their home for as long as they wish.

Council of Mortgage Lenders Equity Release Guide

Age Concern Equity Release Fact Sheet

Please contact us for more information on Equity Release.

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The precise amount will depend on your circumstances but will be a maximum of £250, this fee will be payable on completion. The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.