How Does Equity Release Work?

For residential property owners in the UK, your home is most likely to be probably your largest asset. Whether or not the mortgage is paid off, an increasing number of people are choosing to release money from their property, meaning they get the benefit of the extra cash without having to sell their home.

In order to qualify for equity release, you need to be 55+ years old, so you will either be approaching retirement or have already stopped working.

How much equity can I release?

The amount of equity in your home is calculated by taking a current market valuation of the property and deducting any outstanding loans you have against it. For instance, if the property is valued at £500,000 but there is £100,000 of mortgage still to pay off, then the equity in your house would be £400,000.

The amount of equity you are able to release depends on the above calculation as well as your age and often your health too. If you are 55 years or older, you could release up to 50% of the property value – £200,000 in the above example.

That said, every personal situation is different and it’s essential to get professional advice from a qualified expert before you go ahead with any equity release scheme. John Whyte is an equity release specialist with many years’ professional experience as a mortgage adviser, personal insurance broker and Independent Financial Adviser.

Make an appointment to talk through your options to ensure equity release is the right solution for you, and to compare the market to find the best schemes based on your personal circumstances. To start with, why not use this form to find out how much you could release from your home?

Malcolm & Christine Franklin – Bristol,

We were impressed with John’s detailed knowledge of Equity Release & the professional way he collected the necessary information & presentation of three proposal from which we choose the most suitable to suit our situation. His communication was also very good resulting in a speedy & satisfactory conclusion.

Richard and Carol Edwards – Caerphilly South Wales,

We wish to thank you for the exceptional way you dealt with our recent Equity Release drawdown.
You gave us a clear path that we should follow and carried out all of the stages in a very professional way, keeping us informed at each step. You dealt with us in a very empathetic way,
Keeping in mind our age and the exceptionally stressful situation we found ourselves in.
We would recommend you to anyone in a similar situation to ours.
Once again many thanks for all the help you gave us.

Richard Mathieson – Cheltenham,

It is a long held belief that you should borrow as much as you can for as long as you can, the rationale being that, over time, house price inflation will wipe out the debt. Being of a certain age, the term of any conventional mortgage becomes increasingly limited and so to be presented with so many options through the Canada Life product made it a ‘no-brainer’. Sincere thanks to John for introducing this product to me in an entirely professional and informed manner.

Tony Morris-Davies – Surrey,

I don’t think that we would have got a mortgage without John. He was highly efficent and always dealt with issues promptly. After a couple of false starts due to our circumstances, our third mortgage application was approved four days after the application was submitted and that saved our purchase which was on a tight deadline. So a big thank you to John and we highly recommend his services.

Mr & Mrs Deacon-Hedges – Hove,

I cannot thank John enough for helping my husband and I start to get a grip on our finances. Like many people we have a mortgage and had not really thought about things. We just paid it without thinking. Life events – my husbands ill health made us take stock. Firstly John helped us with our home mortgage and now he is sorting out our buy to lets. He has been so helpful and really made sure we knew what we were doing. No pressure and each step clearly laid out with time for us to think things through and ask questions. The lifting of the stress it had been causing is great and I feel in control.

Paul Stafford – Forect of Dean,

John was extremely professional and helpful, particularly when a surveyor from the first company approached would not provide a value as it was deemed an adjacent property was commercial. Within a very short period John had alternate providers lined up and the whole process went very smoothly indeed.

Margaret Lewis – Haverfordwest. Wales,

John was very helpful and guided me through the process, made sure that everything was going along as it should.
I would recommend him to my friends.

Caroline Thomas – Worthing,

We Can Highly Recommend John Whyte
He was very Professional and Caring and guided us through the whole procedure of Equity Release
Myself and My Family are so pleased as it has enabled us to stay in our Home
Many Thanks to you John
Julie and Caroline

Christopher Williams – Wales,

Initially we were both unsure of the ins and outs of equity release. John was recommended to us and after a phone call John said he was in our area and would pay us a visit in Wales.

John was wonderful explaining everything in simple terms for us and he was very patient with our questions. Because of John it all worked seamlessly and in a timely manner.
Its also good to know that we can contact John at any time if needed.
Would highly recommend John.

So, what is equity release and how does it work?

Broadly speaking, there are three different types of equity release plans:

A Lifetime Mortgage allows you to borrow money against your home while you live there. You will have the option to pay some, all or none of the monthly interest. When your home is sold (i.e. you move into long-term care or you pass away), the mortgage will be redeemed.

A Home Reversion Plan allows you to sell all or part of your home in return for a lump sum or regular payments. You can live in your home rent free for the rest of your life though it will be your responsibility to maintain and insure the property. When it is sold, the proceeds are shared according to the remaining proportions of ownership.

A Later Life Mortgage is a conventional mortgage that is suitable for older home owners up to the age of 80+ who have suitable income sources (employment, self-employment, pensions, investment or rental income) to satisfy mortgage lenders’ affordability criteria.

It is important to understand the features and risks involved with each type of financial plan. At John Whyte Equity Release, we will draw up a personalised illustration to outline those features and risks that are relevant to your individual situation and equity release plan, to enable you to make the right decision.

What can I use the money from my house for?

Equity release can be used for a huge variety of purposes. In fact, you can choose exactly how you wish to use the money. While some people use the funds to treat themselves to a car or luxury holiday, the majority of home owners release equity to pay for home improvements such as a new kitchen or bathroom, perhaps adapting it to make life easier through old age.

Others gift the money to their children or grandchildren, perhaps to pay school or university fees, or to help the next generation to get a foot on the property ladder.

Alternatively, you can draw down the money as income to make life that bit easier financially, perhaps supplementing other retirement income, managing debt or repaying a mortgage, or paying for long-term care.

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Will there be anything left to leave my family?

Equity release is a big decision and needs to be well considered before you decide to go ahead. We all know that the value of residential property can go up as well as down. That said, it’s worth pointing out that Lifetime Mortgages come with a guarantee that the outstanding amount won’t ever be more than the value of your home, thus eliminating the risk of negative equity.

If you release equity from your home, it goes without saying that the overall value of your estate will decrease, and that this will affect the amount of inheritance you can leave. What’s more, if you are not paying interest, the costs can increase the amount of the mortgage very quickly and your borrowing will be higher.

One of the biggest concerns people have is that there will be no equity left to leave as inheritance by the time they pass away, since they fear that the capital will have been eaten up by mounting interest charges. This is a tricky one since no-one can predict how long we live and what happens to house prices during that period.

Finally, equity release can affect your tax position, meaning you may no longer be entitled to means-tested benefits such as income support or universal credit.

If, upon reflection, you decide that equity release is not suitable for your situation, there may be alternative options you can consider such as

Downsizing to a smaller property
Using existing savings and investments
Obtaining home improvement grants
Ensuring all available benefits are claimed

Contact John Whyte for expert equity release advice and guidance

Equity release is fast becoming a popular and sensible financial planning tool for many home owners. Did you know that in 2021, UK home owners released an incredible £4.3 billion from their properties?

If you are considering doing the same, it is highly recommended that you seek professional advice before you sign on the dotted line. John Whyte is your friendly, independent equity release broker operating throughout the UK. For an initial free, no obligation discussion or meeting, please get in touch.

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Welcome to Your Quarterly Update

What’s the best equity release scheme?

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What happens to my equity release plan if I go into long-term care?

Equity Release Sussex is a trading style of The Later Life Lending Network Limited, an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority (Ref – 649443). Registered in England and Wales no. 09832887. Registered address: 70 St. Johns Close, Knowle, Solihull, England, B93 0NH.

For Independent Equity Release advice we do not charge any upfront fees however,
a fee of up to 1% of the total cash facility arranged is payable (subject to a typical minimum charge of £1,295) on completion for our service in relation to lifetime mortgage contracts plus commission from the lender.

The exact amount will depend on the complexity and work involved in your case and will be confirmed by way of a formal fee agreement.

For Independent Mortgage Advice we charge a fee of up to 1% of your mortgage amount payable (subject to a typical minimum charge of £295 payable on application & £300 on completion (£595 in total) plus commission from lender. The exact amount will depend on the complexity and work involved on your case and will be confirmed by way of a formal fee agreement.

The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK