Your Questions About Equity Release Answered

Equity release is a complex arrangement and, like any significant financial decision, should be carefully considered before you commit. Having worked with clients across London and the South East for many years, I’m happy to provide some guidance to some of the most frequently asked questions to help you establish whether equity release might be an option for you.

Of course, everyone’s situation is different, so if you cannot see your question in the list below, or would like some personalised advice in regards to your own circumstances, please get in touch.

Am I eligible for equity release?
To qualify for equity release, you must be at least 55 years of age and own a conventional home in the UK with a value of £70,000 or more.
What types of equity release are there?

There are two main types of regulated equity release, known as lifetime mortgages and home reversion plans. You can read more about these plans here.

Schemes will vary, but lifetime mortgages typically allow you to withdraw funds from your home in multiple small amounts or a single lump sum, up to a maximum limit that is agreed with the plan provider. You retain full ownership of your home, and the interest is either fixed or “rolled up”. The loan is repaid by your estate when you pass away or move into long-term care.

With a home reversion plan, the provider purchases a specified percentage of your home (up to 100%) so that you can access its value. You retain the right to remain in it, rent free. At the end of the plan, when you sell your home, pass away or move into long-term care, your property is sold and the provider takes their portion while you (or your estate) receives the remaining amount.

How much can I borrow?
The amount of money you can borrow against your home will depend on a number of factors. This includes the current property value, you and your partner’s age and health, and the specific scheme offered by the lender. Lifestyle choices and past medical conditions may also be factored in, which is why it’s important to consider all the possible options in order to apply for a scheme that is appropriate to your circumstances.
Will the cash I release from my home get taxed?
If you withdraw a cash lump sum, this money is tax-free. However, should you then continue to earn a regular income, make an investment or deposit it into a savings account, tax may be payable on interest or gains you receive.
How do I set up an equity release plan?

Before committing to an equity release plan, it’s important that you seek independent financial advice to help you fully understand the implications. I offer free initial consultation to answer any questions you may have, and can make face to face appointments either at our office in Worthing or at your own home.

Working together, we can assess your circumstances and I can research the plans that best suit your requirements. Once you are confident that equity release is the right decision for you, I will help you apply for your preferred scheme. For more information, feel free to send me a message via the form on our contact page.

Can I move home if I take out an equity release plan?
Many people choose equity release as a way of accessing funds without moving home or downsizing. However, this doesn’t mean that you have to remain in your home indefinitely once an equity release plan is in place. Should you wish to leave your home, you have the right to move to a “suitable alternative”, as long as it is acceptable to your provider. In most cases, this simply means choosing a new home that a lender would be able to sell on the open market without restrictions.

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