4 Common Questions about Equity Release

Senior couple planning their investments with financial adviser in living room

Previous posts have already covered two of the biggest questions people have about equity release: “Why do people choose equity release?”, and “what’s the best equity release scheme?

However, given that equity release is a long-term financial decision, it’s understandable that people have many more questions and queries about how the equity release process works before choosing to proceed.

Every situation is different and will have its own unique considerations, but here are four of the most common questions that come up.

1 – Can anyone apply for equity release?

Equity release schemes will always have certain criteria that their applicants must meet. As a minimum, these usually include being at least 55 years of age and having the intention to take equity release from your main residence (not a second home, business or other investment property). Some schemes may offer specific arrangements if you are in poor health or are a smoker, for example.

2 – Can I stay in my home as long as I like?

Yes, equity release allows you to stay in your home for as long as you would like. Some lenders even allow for you to arrange in-home care if you become unwell, so you don’t even need to move into hospice accommodation if you don’t want to.

3 – What if I want to move to a new home in the future?

If you decide to leave your home, you can. Many equity release lenders will let you move to a new property, providing it meets certain eligibility requirements. However, if your new home is less expensive then you may have to pay back part of the outstanding loan. If you do not wish to transfer your equity release plan to your new home (perhaps you are moving in with family or into assisted living), you will have to fully repay the mortgage and may be subject to early repayment charges.

4 – Can my family end up inheriting debt?

In most cases, when someone passes away their debt will be paid off using any money or assets they leave behind and family members inherit whatever is left. However, there are equity release schemes that provide a “no negative equity” guarantee, meaning that, even if the sale of your home does not cover the outstanding loan, the scheme provider will not claim money from your other assets.

However, any equity release plan will impact the remaining value of your estate. It is always a good idea to take specialist advice about whether your will should be re-written to reflect this.

If you have any other questions about equity release, such as “why do people choose equity release?” or “what’s the best equity release scheme?” or “is equity release safe” have a read through our FAQ section of this site. Alternatively, feel free to contact me directly and we can discuss your situation and talk about my services in a little more detail.