Equity release is an appealing option for many people wishing to support their later life goals or fund their standard of living in retirement. However, we often get asked at Equity Release Supermarket about the parameters of eligibility.
Here, we walk you through the key criteria, varying requirements and diffuse some misconceptions.
The primary criteria for the most popular form of equity release which is a lifetime mortgage includes the following:
- Homeowner Status: You need to be a homeowner and your home needs to be your primary residence. This is because equity release is a way to access the equity in your home, without the need to sell it.
- Home Valuation: Your home should be worth at least £70,000; however, some property types may require a higher value. A valuation is conducted on behalf of the lender by an independent surveyor to determine the value of your property. Essentially, you can borrow a cash lump sum based on your age and property value. The equity release scheme is secured against your home, and the loan is usually repaid when the property is sold.
- Aged over 55: The minimum age requirement is 55 for the most popular equity release plan which is called a lifetime mortgage. It is popular for numerous reasons, but particularly with those who are struggling to pay their monthly mortgage payments, as equity release can provide a much-needed form of financial relief. By replacing your existing mortgage with a lump sum equity release plan, you have the option of choosing whether to make any monthly repayments, and even then, at what level you are comfortable paying.
Where does retirement come in:
Many people assume that if they’re not retired, then they cannot apply for an equity release mortgage. This is a common misconception, but it is not the case.
For those who meet the above key criteria – are a homeowner, your home is worth in excess of £70k and you are over 55 years old – then you are still eligible for Lifetime Mortgages, Home Reversion Plans and Retirement Interest-only Mortgages (all associated with later life capital raising) even if you’re still in employment. Depending on the amount of capital needed, a short-term unsecured solution may also be more suitable, especially for those who are able to afford structured repayments.
However, it’s important to note that every customer has their own set of personal circumstances, which determine a unique set of results specific to them, therefore as there may be numerous options available to you, it’s important to discuss your plans with a fully-qualified adviser. They will be able to explain all your options in detail, and provide a bespoke solution based on your personal situation.
This personal advice is provided without obligation, and our whole of market experts will not charge you for a consultation and their initial advice. You would only pay an advice fee, when any recommended plan completes, and you would not be committed to any fees during the initial advice process.
Do all property types apply?
Most property types are eligible for equity release, including:
- Bungalows
- Detached House
- Semi-detached houses
- Terraced houses
- Flats/apartments
Equity release lenders will consider the age, location, value, framework, and condition of your property to determine whether they deem it to be eligible. Different lenders will enforce different sets of criteria and accept varying property types. This is where an independent whole of market adviser – such as Equity Release Supermarket comes inti their own as they can source the entire later life market to find the best deal for you.
Finding out more:
We understand that releasing equity is a big decision. This is why we offer independent whole of market advice to our customers, which not available through all equity release firms. It’s always a good idea to ask your adviser whether the firm they work for also has a lending arm, as they may actually be tied to their own lender e.g Key Advice are tied to More2Life products. Additionally, there are broker firms that work from a limited panel of other lenders. Again, both scenarios do not allow you to compare the whole equity release market which is a must in order to find the best deal available.
Of course, equity release is not without its risks. It is important to do your research and shop around for the best deal. This is where our smartER™ tool helps to play a crucial role and why it’s so popular with our customers.
smartER™ is the only live consumer research tool in the equity release market that allows you to view products and deals based on your personal circumstances. It’s easy to use and will only show you accurate rates and exact amounts that are available.
Equity release is an advised product and regulated by the FCA, which means that you need to speak to a financial adviser if you’re considering taking equity from your home. It’s important that you speak with a whole of market adviser who is independent of any specific lender to ensure you get the most suitable product possible. Equity Release Supermarket advisers are exactly that - independent and whole of market, and you can find your local adviser here.
However, it's important to weigh the risks and benefits before making any decisions and consult with a financial adviser after your initial research.
