Access the value of your home with equity release

Q: Can I release equity if I’m under 55?

If you\'re under the age of 55, unfortunately, you won\'t be able to benefit from an equity release scheme. However, if you still want to release equity from your property, you can opt for a residential mortgage. In that case, you will have to remortgage your home and arrange a new mortgage deal with a higher loan-to-value (LTV) than your current one. Discover more about Ascot Lloyd mortgage products below.

Are you a homeowner over the age of 55? Equity release could provide you with cash for renovations, investing, repaying debts and more, whilst allowing you to stay in your home.

What is equity release?

Equity release products allow homeowners over the age of 55 to access cash invested in their homes. Money can be accessed as a lump sum or as multiple payments, depending on what you prefer. You’ll typically get between 20% - 60% of your property’s value. The maximum equity you receive can also depend on your age, property condition and market value. Being in poor health can be an advantage in that lenders may offer either a lower interest rate or larger loan.

Equity release can be helpful if downsizing is not a practical solution to your needs.

Important - Your home may be repossessed if you do not keep up repayments on your mortgage. Equity release isn’t right for everybody and every home, so it depends on you and your circumstances.

Types of equity release

There are two types of equity release options available for homeowners: a lifetime mortgage or home reversion plan. Home reversion arrangements are however much less commonly offered by providers of equity release.

Lifetime mortgage

A lifetime mortgage is a loan taken against your home's value, allowing you to release tax-free cash without having to move out. Interest is charged on what you have borrowed, which can be repaid or added on to the total loan amount. Typically, the rate of interest is fixed but some providers do offer variable rate arrangements, they also tend to be higher than standard mortgages. This type of loan does not need to be fully repaid until you pass away or go into long-term care. To repay the loan your home will be sold, and anything left from the sale of the property will go to your beneficiaries. On the other hand, if your estate can pay off the mortgage without having to sell the property they can do so. With this type of equity release, you can retain full ownership of your home while making use of the available funds.

Home reversion plan

A home reversion plan is another form of equity release that involves selling all or a portion of your home in return for a tax-free lump sum payout or regular income (or both). You’re still allowed to live in your home until you pass away or enter long-term care, but you no longer retain full ownership of your home.

Advantages and disadvantages of equity release

Equity release allows you to access untapped value from your property, but it does come with its pros and cons.

Advantages

Receive regular tax-free payments or a lump sum
You can continue to live in your home
You will never owe more than the value of your home
You can reduce the value of your estate for inheritance tax purposes
Flexible repayment options
Option to move house even with an equity release loan

Disadvantages

You may be subject to early repayment fees or exit fees
You can’t take out another loan against your home
Interest rates could negatively influence your debt repayments but are typically fixed with most providers when you take out a lifetime mortgage
The inheritance you leave behind will be reduced and the younger you are when you do this the greater is the potential impact. The amount owed compounds so, assuming your are paying the interest, every year you’ll be charged interest on a larger and larger sum
Releasing equity could impact your entitlement to means-tested state benefits such as pension or universal credit
The overall cost can be significant, and you should always consider taking independent legal advice (this is a requirement of providers who are members of the Equity Release Council) as well as independent financial or mortgage advice

Important - tax rules can change and their impact on you will depend on your circumstances. The FCA does not regulate estate planning and inheritance tax planning.

Understanding the risks

The money you receive through your equity release scheme must be repaid after you pass away or move into long-term care. With a lifetime mortgage, you will owe the borrowed amount of money as well as accrued interest. As for home reversion plans, you only receive a portion of your property’s total value once it’s sold.

Explore equity release options with Ascot Lloyd

Ascot Lloyd’s independent mortgage advisers can assist you with the entire equity release process. By speaking to an adviser, you will receive support in making the right decisions for you and your lifetime goals. Equity release should form part of a full financial plan that factors in pensions, protection, mortgage, investments, and more.

Your adviser will evaluate your financial circumstances and develop a plan that suits your short and long-term goals. If relevant, your adviser will explore equity release options with you. Being independent, our advisers aren’t bound to one specific financial product. We can explore the whole market to find an equity release product that truly works for you.

Access our independent equity release advice today

Contact our team of experts about unlocking the value of your home and enjoy financial flexibility through equity release.

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Frequently asked questions

Can I sell my house if I have an equity release scheme?

Yes, you can sell your home if you have equity release. An equity release scheme can be repaid at any point, depending on the terms of your contract. However, if you downsize your home, you may have to repay a portion of your debt, which can result in early repayment fees.

What happens to the equity release debt when I die?

When you pass away, your home will usually be sold by the executor of your estate. The funds from the sale can be used to pay back the equity release scheme and pay the agent and solicitor fees. Any left-over money will be paid to your beneficiaries.

Can I release equity if I’m under 55?

If you're under the age of 55, unfortunately, you won't be able to benefit from an equity release scheme. However, if you still want to release equity from your property, you can opt for a residential mortgage. In that case, you will have to remortgage your home and arrange a new mortgage deal with a higher loan-to-value (LTV) than your current one. Discover more about Ascot Lloyd mortgage products below.