Questions & Answers on Equity Release
How much can I borrow using an equity release scheme?
We can arrange loans from as little as £10,000 up to £500,000 but larger sums can be arranged.
To find out immediately as to how much you might be able to borrow on a Lifetime Mortgage try an online calculator by clicking on the following link.
Will I have to sell my home?
Not unless you want to. Lifetime mortgage schemes do not involve selling legal ownership. Instead these schemes just allow a lender to secure their loan against your property to ensure that it cannot be sold by yourselves without them knowing about it, just like any other mortgage you may have had. This way the property remains your property and you or your beneficiaries benefit from any increase in the value of your home over the remainder of your lifetime.
In contrast if you would prefer a Home Reversion Plan (perhaps because you wanted the maximum amount of money from your home, or you have no one to leave the house to), then yes you would agree to selling a percentage of your homes legal ownership, but you would always retain the right to live in the property for the rest of your life/lives.
Will I always be able to remain living in my property?
Yes , all the schemes we advise are safe schemes approved by The Equity Release Council (formerly SHIP). This means you or the last one of a couple will retain the right to remain living in your property for the rest of their lives no matter how long this is.
Will I have to pay any monthly repayments or rent?
No - Apart from a very small annual rent (normally no more than £10 per year) which some Home Reversion Plans impose, you will never have to pay any rent under regulated equity release schemes which are the only schemes we advise on.
Should you prefer, under an ordinary mortgage or some Lifetime mortgages, you can choose to make monthly repayments of interest or interest and capital to stop the debt from building up or to gradually reduce it, but this would be only if you want to.
Do I pay tax on the amount released?
No, the amount released through an equity rlease scheme is deemed as capital and no tax is due. However, should it be invested or put on deposit, any growth or interest derived could be taxable.
What can I use the money for?
The money raised through an equity release scheme can be used for any legal purpose. However if you have any outstanding mortgage or loan secured on your property, these must be repaid by your solicitor from the proceeds of the equity release before you receive any balance.
Just how soon could I have the money?
We usually manage to have all Lifetime mortgages completed within 8 -10 weeks although it can take longer, with a lot depending on just how quickly your solicitor acts. Home reversion plans can take a little longer, typically 12-14 weeks.
How much equity will be left for any care we need or to leave to our family?
With a Lifetime Roll Up Mortgage equity release plan, this will depend on the amount you wish to borrow, how long you or any spouse lives, the interest rate and how house prices increase. We will issue with a full Key Facts Illustration showing you how the debt will increase with time and as the interest rate remains fixed for the rest of the term of the scheme, you can be assured that these will be accurate. The only thing we cannot be sure of if how much your home may increase or decrease by over time. However, one important thing to note if entering into an equity release scheme is that you can be assured of is that there can never be a negative equity situation created on death or needing to go into care under the lenders NO NEGATIVE EQUITY GUARANTEE.
With a Home Reversion Plan you will always be left with the value of whatever percentage of your homes ownership you retained control over.
How much does it cost to apply for an equity release loan?
The only cost you will incur to apply for equity release, is a valuation fee which varies on the lender used and the value of your home. We do not even charge you for submitting an application. When the loan completes, you will incur other charges, which include a Lenders Arrangement fee; A fee charged by your chosen solicitor; and our fee. As these figures vary based on house prices we are unable here to give you any figures, but we issue a full Key Facts Illustration outlining all these costs before you agree to proceed with an equity release scheme.
Do I need an income to apply for one of these loans?
Not for specialist Lifetime Roll Up Mortgage Equity Release or Home Reversion Plans. As the interest on a Lifetime Roll Up Mortgage is added onto the initial loan and is only repaid on final sale of the home, no income is required to release equity, unlike for other types of loans or indeed Interest only mortgages. With Lifetime Roll Up Mortgages the amount you can borrow is simply dependant upon your homes value and your age, or the youngest age in the case of joint applications. Should you prefer or only be eligible for an interest only mortgage then the amount of loan will be determined by your post retirement income.
Can I repay the equity release loan before the end?
Equity release schemes should not be viewed as short-term loans. They are intended for life. Nevertheless, it is possible to repay Lifetime Mortgage schemes at any time, by paying back the initial loan and accumulated interest, and any Early Repayment charges, which may be applied under the terms of the loan and described on the Key Facts provided.
Although such penalties may be charged, if you decide simply that you don't want the loan anymore, Early Repayments Charges are never applied on death or moving into full time care (in joint cases - this is on last persons death or move into care). We also have some schemes, which will allow voluntary partial repayments at anytime without penalty.
Under Home Reversion Plans, whether you can buy back the share sold will depend on the investor, being willing to sell the share and you would need to pay the new market rate for whatever share you wanted to buy back.
Can I come back and borrow more?
With a Home Reversion plan, providing you have not sold 100% of your homes ownership at the outset, you should be able to sell further percentages at anytime to raise more money.
With a Lifetime Roll Up Mortgage scheme, whether you can borrow more in the future will depend on whether you have taken the maximum initially- when it will be unlikely that further money will be available, how your home has increase in value since you took the initial loan and the type of scheme you took initially. If you took a standard Lifetime Roll Up scheme at the outset you may be unable to take further amounts, (even if you didn't take the maximum initially) until a certain number of years have passed since taking the initial loan. Even then a fresh valuation could be required and new legal fees and Lenders arrangement fees would be incurred. However, if you have taken a Flexible Drawdown scheme at the outset, a predetermined maximum facility of money would have been agreed. Providing you didn't take this maximum at outset, you will be able to borrow more (providing more than a certain minimum amount) at anytime and as often as you like, without the need for new valuations or legal fees, until you use up all of the facility.
With an interest only mortgage the maximum amount you will be able to borrow will be largely determined by your post retirement income. If you haven't already taken a mortgage for the maximum amount you may be able to arrange a further advance. However, with such schemes you should avoid taking more than is comfortable and could be covered by an alternative Lifetime Roll Up Mortgage, as should the repayments become unmanageable, you may be unable to get a Lifetime Roll Up mortgage to replace it and your home may be repossessed, or you could be forced into selling a high percentage of your home to a Home Reversion plan provider.
"Equity release" includes home reversion plans and Lifetime Mortgages. To understand the features and risks, ask for a personalised illustration.