Equity release explained 2022

  • See if you are eligible for equity release
  • Understand how it could boost your retirement income
  • Learn about the equity release options available to you
  • Get the best equity release advice
In this guide:  We explain what equity release is, how it works, the lending criteria and eligibility for releasing money from your home and where to go to for advice

What is equity release and how does it work?

Call 0800 133 7656
Updated 6th January 2023

Equity release is a way you can access the money tied up in your home without having to move. You continue to own 100% of your property value and the loan is only repaid once you die or move into long term care. Its essentially a long term loan for homeowners aged 55 or older.

The money you release is tax free and can be used however you wish. Perhaps for home or garden improvements, to pay off existing debts or mortgages, for holidays, to help family financially or to improve retirement funds by supplementing your pension pot.

Here's how equity release works

When you release equity from your home, a loan is secured against your property that is only repaid once you have died or moved into long term care and your property is sold.

Depending on the type of equity release you choose, the money can be released in a single sum, or in smaller amounts as and when you need it.

Types of equity release – what are your options?

There are two main types of equity release – a lifetime mortgage and a home reversion plan. Both allow you to release money tied up in your home but in very different ways.

Here’s how the two equity release options work:

Equity release option one – a lifetime mortgage

A lifetime mortgage is the most popular of the two options. A loan is secured against your home in a similar way to a typical residential mortgage. The difference is that you don’t have to make any monthly repayments.

Instead the interest builds up over the years and is only repaid when the last surviving plan holder dies or moves into long term care.

Equity release option two – a home reversion plan

This type of equity release is different as a home reversion scheme is not a loan. With this option you agree to sell all or part of your home in return for a lump sum of money.

There’s no interest to pay however, as the value of the property increases, you only benefit from the increase on the percentage of the home that you own.

Home reversion companies take on the risk of unknown future property prices, so they are likely to offer you less than the actual property value.

When the property is sold upon the last survivor’s death (if joint) or because they’ve moved into a care home, the home reversion company will receive their share of the proceeds.

Equity Release Property - Am I eligible?

Equity release eligibility is determined by the providers lending criteria. This will be based on your personal information and the providers equity release property criteria as to what they deem acceptable. Generally the following conditions apply:

  • For a lifetime equity release mortgage you or the youngest homeowner must be 55 years of age or over
  • For a home reversion plan, you or the youngest homeowner must be 65 years of age or over
  • Some lenders impose an upper age limit of 90 while others have no upper age limit
  • Your property must be in the UK or Northern Ireland and your main residence
  • Your property must be worth at least £70,000 and in good condition

If you have an existing mortgage you can still release equity from your home. However, that mortgage would need to be fully paid off with the money that is released.

Equity release on jointly owned property

You are eligible for equity release on jointly owned properties but the way in which the property is co-owned will determine how the plan works.

Joint tenants – if the property is owned as joint tenants, each person owns the whole property. If one person dies, the property along with the lifetime mortgage automatically passes on to the surviving tenant.

So, with joint tenant equity release, the surviving owner retains full flexibility of the loan and drawdown facilities where applicable and the loan is only repaid once they have died or moved into long-term care.

Tenants in common – if a property is owned as tenants in common, each owner has a share of the property and can state who should inherit their share when they die.

So, tenants in common equity release is available, however the provider may restrict further access and future lending once the first home owner dies.

equity release criteria

Equity release examples by age and property value 

To help explain more about how much you can borrow with a lifetime mortgage, here are some examples of equity release by age and property value:

Your age

Examples of lifetime equity release mortgage maximum borrowing by age and the value of your home

Home value £150,000 £200,000 £300,000 £400,000 £500,000 £1,000,000
Over 55 £46,350 £61,800 £92,700 £123,600 £154,500 £309,000
Over 60 £55,350 £73,800 £110,700 £147,600 £184,500 £369,000
Over 65 £62,850 £83,800 £125,700 £167,600 £209,500 £419,000
Over 70 £70,500 £94,000 £141,000 £188,000 £235,500 £470,000
Over 75 £77,550 £103,400 £155,100 £206,800 £258,500 £517,000
Over 80 £85,500 £114,000 £171,000 £228,000 £285,000 £570,000
Over 85 £88,920

£118,560

£177,840 £237,120 £296,400 £592,800
These figures are a guide, as at 20/9/22; use the online calculator to obtain a personalised illustration.  

What else can affect your eligibility for equity release?

In addition to age and value, the type of property, especially non standard property may also affect your eligibility for equity release.

Most standard construction properties ie. brick, stone, tiled or slate roofed houses, flats and bungalows) are acceptable. Some lenders will also consider equity release on  non standard property with features such as annexes and flat roofs, however these would be dealt with on a case-by-case basis, with some construction types presenting more challenges.

An advantage of equity release is that your income and expenditure do not affect your eligibility, simply because there are no monthly repayments to be made.  Lenders are also more relaxed if you have a poor credit history, although this might depend on how bad the situation is.

Can you be refused equity release?

You can be turned down for equity release, but it all depends on your property and personal circumstances. Although your credit score will not impact your eligibility as such, you may be refused equity release if you have any outstanding IVA’s or County Court Judgements (CCJ’s).

However, the main reasons for being refused equity release are usually connected with the state of your property.

The equity release property lending criteria is based on the value of the property rising over time, so lenders look closely at issues that could affect its value and subsequently the ability to sell it.

Criteria vary between lenders, but the most common reasons given for refusing equity release are:

  • Non standard property construction
  • Risk of flooding
  • Ex local authority
  • Proximity to commercial property or electricity
  • Flat roofs and single skin structures
  • Poor condition and upkeep
  • The presence of asbestos

Ways to contact us

Call 08001337380
Call 0800 133 7656
Arrange a callback
Arrange a callback
Try the calculator
Try the calculator
Email us
Email us

Is equity release regulated by the FCA?

Equity release lifetime mortgages and home reversion plans are regulated by the Financial Conduct Authority (FCA). This means equity release mortgages are safe as you are protected by the FCA’s rules and principles and have access to the Financial Service Ombudsman and the Financial Services Compensation Schemes should the need arise

In addition to being regulated by the FCA, most equity release providers are also members of the Equity Release Council. The ERC sets the standards for equity release which includes the right to remain in your home for life or as long as you choose, flexibility to move to another property without financial penalty and the ‘No Negative Equity’ guarantee.

The no negative equity guarantee is extremely important as it ensures that once the property is sold and the solicitors and agents fees have been paid, if there is insufficient money remaining to pay the outstanding equity loan, neither you, your family or your estate will be liable to pay any more.

So to avoid any equity release horror stories, make sure the company you choose is authorised by the Financial Conduct Authority and a member of the Equity Release Council.

Over50choices is also a member of the Equity Release Council.best equity release advice

Equity release advice

Releasing equity from your home is a big decision, which is why getting the best equity release advice is key. In addition to looking at the options available to you, the right adviser will also help you consider the alternatives along with any risks, to understand if it’s the right decision for you.

Getting advice from a member of the Equity Release Council means you will go through a structured financial advisory process. For your protection, you will also need to seek independent legal advice, a requirement of all ERC members. Choosing a solicitor with equity release experience will help to ensure you receive the best advice.  

Where can I get advice on equity release?  

For advice on equity release, you can either use a qualified independent financial adviser or an independent broker.

The benefit of using a broker is that they will compare equity release plans across a range of providers, not just individual companies. This will give you a much broader view of the best and most suitable company for you.

Having reviewed the market, we have teamed up with leading award winning specialist, Age Partnership. They offer initial free no obligation help and advice, and have agreed exclusive plans with leading lenders that you may not be able to get elsewhere. (Only if you proceed and your case completes would a typical fee of £1,795 be payable).

We know it's a big decision!

That's why we have teamed up with Age Partnership one of the UK's leading equity release specialists.

Find out how much cash you could release by clicking on the button below.

Equity release calculator

Did you find this information helpful?

Your equity release questions answered

  • Will I still own my own home?
    • Yes, ownership of the property remains with you and you can live in the property for the rest of your life.

  • Can I move home in the future?
    • Yes, you can move home with an equity loan subject to the provider’s scheme rules. All members of the ERC must offer schemes that allow flexibility to move without facing financial penalties.

  • Will my family be left with my debts?
    • No, when the property is sold your outstanding balance will be repaid to the equity release provider and any surplus paid to your family/estate. In the event that you owe more than the property is worth, your family will not be asked for any money, as all plans come with a no negative equity guarantee.

  • What happens if I have to go into care?
    • Should this happen and you have a partner/spouse living in the property then the will continue to do so. If you live alone and are unlikely to return then the property will be sold and the provider repaid and the balance returned to you; your family will be consulted at all times.

  • Can I apply if I still have a mortgage outstanding on the property?
    • Yes, although this will need to be repaid from the new equity release mortgage. Our advisers can advise you on this.

  • How long will it take to apply?
    • Applying is simple and your adviser will help you with this once you have decided to proceed.

      Once you have applied it typically takes around 6 to 8 weeks to get all the legal paperwork and mortgage in place.

  • I'm not sure what to do or where to start!
    • Don't worry, you are not alone.

      Releasing equity from your home can seem quite daunting, but the specialists at Age Partnership are here to help. They will not talk financial jargon at you but instead they will hold your hand all the way through the process, help you compare equity release plans and answer any questions you may have or concerns.

      To start, why not use the equity release calculator to see how much you could borrow, if you're not sure of your property value just take a guess, it doesn't matter as we can help you with this.

We know it's a big decision!

That's why we have teamed up with Age Partnership one of the UK's leading equity release specialists.

Find out how much cash you could release by clicking on the button below.

Equity Release Calculator

We work with

First Choice Health
Age Partnership
Quotezone.co.uk
sunlife.co.uk

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Our aim is to provide you with clear and accurate information to help you research your chosen financial products and services. The material on this site is for general information only and does not constitute any form of advice or recommendation.

If a link has an * by it, it means it is an affiliated link to an insurance company or broker that may result in a payment to the site. Should you use the equity release calculator, speak to an Age Partnership adviser and take out a plan out using their services, we receive a commission, however this will not affect the price you pay.

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The information provided on this site is accurate at the date of publication, occasionally however, things will change before we have had the opportunity to update them, so please do check. Always do your own research and take independent advice.

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Over50choices is an independent company and regulated by the FCA (No.594280) for insurance products only and a member of the Equity Release Council.

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