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What is equity release and how does it work?

Releasing equity from your home can help you to turn your property into valuable retirement income

What is equity release?

When it comes to your house, your equity is its market value, minus any debts you have secured against it.

Equity release is the process of turning that equity into cash that you can spend, without having to sell your home.

How does equity release work?

There are two ways to release equity from your home – taking out a loan against part of it, with a lifetime mortgage, or selling part of it, with a home reversion plan.

By far the most popular form of equity release, a lifetime mortgage is a loan that is repaid when you die or enter long term care. The lender receives their proceeds from the sale of your home upon your death or when you enter long term care

With a home reversion plan you sell a portion of your home. When you die or enter long term care your house will be sold and the home reversion provider will get their share of the proceeds

With either product you can receive the money in a lump sum or over several instalments.

To release equity from your home you need to have an equity release product recommended to you by a qualified adviser who has considered your unique circumstances. There are lots of things to consider, including inheritance and how equity release payments could affect your benefit entitlements or tax obligations.

Before identifying the right equity release product, the adviser will also help you to consider alternatives such as downsizing, remortgaging to a standard mortgage product or a retirement interest-only mortgage.

Equity release isn’t always the right solution, but it is working for lots of people.

Equity Release Explained

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Equity release explained

As we get older, we want to start achieving our retirement goals. Whether it’s to pay for home improvements, fund retirement, travel, or to help a family member onto the property ladder, equity release is a way of releasing part of the value of your home without ever having to move out, to help you accomplish those dreams.

So, how does equity release work? Equity release is available to homeowners aged 55 and over. The money is released from your home in the form of tax-free cash that you can do whatever you like with.

How much you can release depends mainly on your age and the value of your property. The money you receive from equity release is tax-free, but could become subject to tax later if, for example, you put it into a savings account.

There are two ways of releasing equity – a home reversion plan, where you sell-off a portion of your home, or a lifetime mortgage, which is the most popular form of equity release, where you take out a loan against part of your home and continue living there.

You’ll never owe more than the value of your home, and the loan is repaid through the sale of your property when you die or go into long term care.

Using a lifetime mortgage will reduce the value of your estate, but you have options to repay some or all of the interest, and even pay back some of the capital, subject to the lenders’ terms and conditions.

Equity release is a big decision but finding the right lifetime mortgage could open doors to the things you’ve always dreamed of, whatever they may be.

If you’re considering releasing equity from your home give OneFamily Advice a call. In your free initial consultation, you will have the opportunity to ask any question you may have. Your adviser will help you to find out if a lifetime mortgage is a good fit for you.

OneFamily Advice – whole-of-market lifetime mortgage advice. Give us a call on 08001448244 or head over to https://www.onefamily.com/ to book your free initial consultation.

Equity Release Explained by OneFamily Advice

Equity Release

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Maximum loan amount:

Important: The loan amounts above are an illustration of the amount you could borrow. The actual amount may vary depending on your individual circumstances. The figures are not guaranteed and do not constitute an offer to lend. The loan amount will need to pay off any existing mortgage secured against the same property.

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