If you’re looking for an explanation for a confusing term, check our equity release jargon buster.
Am I eligible for equity release? Are there alternatives to an equity release plan?Will equity release affect my state benefit entitlement?Does the cash I release from my home get taxed?Can I move home if I want to?Would my partner have to move when I die?What happens if I have to go into care?Can I leave an inheritance?What about if I don’t need all of the money right now?Can I do what I want with the money?How much can I release?Can I end up owing more than the value of my home?Are there any fees to pay?Does equity release mean that I’m renting my home?What are the risks of an equity release plan?What happens if I die in the early years?
You may be eligible for an equity release plan if you:
Equity release is only available on your main residence, which must be in the UK.
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Yes, there are alternatives. You could move to smaller home, or even move to a cheaper area to release the money you need. You might be able to take out a loan or mortgage to raise the cash as well.
There are other alternatives too, such as staying in work a little longer, as well as making sure that you shop around for the best pension annuity and making sure you are receiving all the state benefits you are entitled to.
Weigh up your options carefully, and seek financial advice if you are unsure which route will be best for you.
Maybe. Some state benefits are means-tested, so releasing a lump sum from your home may affect what you’re entitled to. Our equity release advice service (provided by Just Retirement Solutions Limited) contains a comprehensive state benefit check, so you can make an informed decision based on your own personal circumstances.
The cash lump sum released from your home is tax free. However, if you then place this money in a savings account, purchase an annuity or an investment, tax may be payable on any interest, income or gains you receive.
All providers that are members of the Equity Release Council, have to allow you to move if you want to, without charging a penalty.
It depends on whether the equity release plan is taken out in joint names. If it is a joint plan, then your home will only be sold when you have both died. But if you take out the plan in just your name, then your home would have to be sold and your partner move (unless they could raise the funds to repay what you owe).
It depends on the plan you choose and if the plan is in joint names or just one name. If the plan is in your sole name and you have to go into permanent residential care, your home may have to be sold and the amount you released repaid.
Yes you can still leave an inheritance and release equity from your home. There are two types of equity release plan, and you have the option of leaving an inheritance on both:
It’s important that you involve anybody who you’d like to leave an inheritance to when arranging an equity release plan.
Our equity release advice service (provided by Just Retirement Solutions Limited) actively encourage you to have close family or friends present at consultations to make sure everybody with a vested interest is aware of how equity release will affect any inheritance you wish to leave.
Some lifetime mortgage providers offer what is known as a “drawdown” option. This means that you only release the money you need from your home, when you need it. The advantage of this is that interest isn’t charged until the money is released.
Yes, you can do what you want with the money: a holiday of a lifetime, purchasing an annuity, it’s up to you.
How much can I release?
The amount you are able to release will depend on:
There are also other things that will affect the amount you can release, such as whether you want a joint plan with a spouse or partner, or whether you want to leave an inheritance.
Can I end up owing more than the value of my home?
Most lifetime mortgage plans carry a “no negative equity guarantee”, which means that you’ll never owe more than your home is worth.
The other type of equity release plan, Home Reversion, is based on you selling a percentage of your property to the equity release provider. So instead of you being charged interest, the provider is banking on the value of your property increasing in value so that their stake is worth more. However, as a percentage of your property’s total value, it never increases.
Our equity release advice service only uses providers that are members of the Equity Release Council. Council members guarantee that you will never owe more than the value of your home.
Are there any fees to pay?
Yes. There will generally be arrangement fees, legal fees, valuation fees as well as any financial advice fees to pay. While some of these may be able to be added to the amount you release, others may have to be paid upfront.
Remember that by adding fees to the amount of equity you release, the greater the proportion of your home that will be owed to the plan provider (or the less money you will be able to release).
Does equity release mean that I’m renting my home?
Even if your equity release provider owns all of your home, you are not renting in the traditional sense. You are still responsible for insuring the property, as well as for any maintenance that needs to be done. You also will not pay any rent (although some lifetime mortgage plans may allow you to, in order to keep interest in check).
What are the risks of an equity release plan?
There are different risks, depending on the plan you take. See our Home Reversion and Lifetime Mortgage factsheets for more information.
What happens if I die in the early years?
This will depend on the type of plan that you take out:
Call Just Retirement Solutions on 01737 233462
Retirement Guides Equity Release Jargon Buster