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Equity Release Remortgages

An equity release mortgage may be a good option for those aged 55 or over who want to free up money.

A decision to remortgage for equity release can allow property owners to use their home to raise financial collateral. It can allow you to release up to 60% of your property’s value, meaning you may be able to unlock the funds you need.
  • You must be a homeowner aged 55 or over to draw an equity release.

  • The amount that you can borrow is normally restricted to a maximum of 60%, depending on the borrower’s age and property value.

  • Equity release plans are available as a lifetime mortgage or a home reversion plan.

  • Any outstanding debt owed would be repaid on the sale of your home.

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Am I eligible for an equity release mortgage?

If you’re a homeowner aged over 55, you can apply for an equity release mortgage. However, borrowers should be aware of the requirements you’ll need to fulfil.

Your eligibility depends on several factors, including:

How does equity release work?

You can release equity in one lump sum or agree to several smaller payments if you’d prefer to receive instalments over time. However, you will pay interest on each of the smaller sums.

Before releasing equity from your home, it’s important to receive professional advice from a financial advisor so you fully understand the process and can decide if it’s right for you.

Types of home equity release

There are two different types of equity release for your property. Each has its own features, benefits and things to be aware of. Read more about equity release.

Lifetime Mortgage

Releasing equity as a lump sum is a form of lifetime mortgage agreement. You’ll usually receive your finances in one go. However, this arrangement also comes with compound interest. This means the outstanding balance can grow larger than it would with other kinds of loan.

Some borrowers may choose a lump sum equity release, as payments don’t need to be made until the house is sold on, although some options may allow you to make repayments rather than let the interest roll up.

Home reversion plan

A home reversion equity release plan allows you to sell either the entirety or a portion of your property at a below market value. Home reversion plans only apply to those over the age of 65.

You can either receive the funds in a lump sum or through regular payments. After the sale, you’ll then be able to live in the house rent-free. At the end of the plan, your property is sold and the sale proceeds are shared according to the remaining proportions of ownership.

Pros and cons of home equity release

Pros of equity release

Benefits of equity release include:

  • It can sometimes be the only remortgaging option for older homeowners looking to release funds whilst staying in their own home.
  • Some plans mean you don’t have to worry about monthly repayments. What you owe is taken from the sale price when the property is sold.
  • You and your family shouldn’t ever owe more than the value of your home as most lenders operate what’s called a ‘no negative equity guarantee’.

Cons of equity release

As with any financial decision, it’s important to be aware of the disadvantages before making any commitments. These can include:

  • Some plans charge compound interest, meaning the amount you owe rises more than with other loans.
  • Remortgaging comes with various fees, so be sure you can cover the cost before applying.
  • Once an equity release mortgage is finalised, you’re unable to take out any further loans against the property.

Commonly asked questions about equity release

Releasing equity from your home is a big financial decision, so it’s important to be aware of every factor involved. Here are some of the most common queries around equity release.

How much can I borrow?

The amount you can borrow varies depending on your provider and circumstances. Some lenders allow a borrower to release up to 60% of their property value.

How long are the repayment terms?

Your repayment terms will depend on the type of deal you agree. Though most don’t feature a monthly repayment plan, some drawdown mortgages allow you to cover the cost of the interest if you wish.

Do I need a valuation?

Yes, you will need to have your property valued during the application process.

Are there any loan fees?

Lenders may charge fees for the application process to cover the costs of setting up the application and legal requirements. Our commission comes from the lender once your equity release loan is drawn down.

Applying for home equity release

When it comes to drawing an equity release mortgage there’s a lot of financial aspects to consider. We want customers to find it as easy as possible to find out what they need to know.

Once you have decided how much you want to borrow you can use our online application to apply. We can then put you in touch with one of our specialist providers, who will work with you to decide whether an equity release scheme meets your needs and circumstances.

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