Release equity from your home with a Lifetime Mortgage

Learn how to release equity from your home with a Lifetime Mortgage and request your free copy of the Reader’s Digest Complete Guide to Equity Release

We know that retirement isn’t always as simple as you’d like it to be. Pension pots can be problematic, investments unreliable, and knowing where to turn if you are seeking some financial breathing space can be confusing. 

Many of us have grand plans for our years beyond the age of 55, and there can be pressure to tick off your long-held goals even when your budgets aren’t stretching as far as you may have hoped. However, equity release can help. House prices have risen steadily over the years and increasing numbers of homeowners have more equity in their homes than ever before.

What is equity release?

Equity release is a financial solution available to over 55s that allows you to access some of the wealth tied up in the equity of your home as tax-free cash to spend on your wishes.

There are two main types of equity release product, either a Lifetime Mortgage, which is when you borrow against the value of your home, or a home reversion plan, which requires you to sell some of it to the equity release provider.

How does equity release work?

At Reader’s Digest Equity Release, our speciality is in offering advice on releasing equity with a Lifetime Mortgage.

With a Lifetime Mortgage, there is no requirement to make any repayments, although many plans allow you to make some if you wish. You retain full ownership of your home and the equity released, plus interest, is only due for repayment once the last homeowner has passed away or entered long-term care. This is usually achieved through the sale of the home.

Flexibility is prioritised when it comes to a Lifetime Mortgage and there are two main types of plan to choose from depending on how and when you want to access your tax-free cash. If you opt for a Lump Sum Lifetime Mortgage, you will receive one single payment. Alternatively, a Drawdown Lifetime Mortgage allows you to release a smaller initial tax-free sum. The remaining equity available to you is then placed into an interest-free reserve from which you can access at a later date.

Releasing equity from your property will impact the value of your estate and could affect your entitlement to means-tested benefits. Therefore, it’s important to receive professional advice from an equity release specialist so that you can be certain that your equity release plan is the best option for you, your family, and your goals.

Who can get equity release?

To be eligible for equity release, you must:

  • Be over the age of 55. There is no maximum age for equity release, but the provider may set their own limit.
  • Own or want to own a home in the UK.
  • Want to release at least £10,000.
  • Have cleared, or be able to clear, your existing mortgage upon completion of releasing equity.

The maximum amount of equity that you can release will be affected by the age of the youngest homeowner and the value of your home. In general, the older that you get, the higher amount of equity that you can release.

Try our free online equity release calculator today to get an instant estimate of the amount you could release.

What are the most popular uses for equity release?

There are many different goals you could achieve with the equity in your home. Some of the most popular uses of the tax-free cash obtained by releasing equity include:

  • Clearing an existing mortgage or debt – and have more for the things that matter in retirement without the pressure of required repayments.
  • Home improvements – achieve the home of your dreams with a new kitchen, conservatory or redesigned garden.
  • Income boost – we know that many of us find we have less in retirement than expected. With equity release, you could have a welcome cash boost and live more comfortably.
  • A gift to loved ones – many over 55s use equity release to fast forward their inheritance and fund house deposits, weddings, and school fees.

How does the equity release application process work?

The equity release application process is different for everyone, but it is always reassuring to have a rough idea of what to expect before releasing equity.

The first thing you should do if you are considering equity release is get all of the facts. You can call our friendly Information Team on 0800 066 2491 and they will be able to check your eligibility for a Lifetime Mortgage, share an initial estimate of the tax-free cash you could release, and answer any of your pressing questions about equity release.

When you are ready, the next step is to seek independent financial advice, so that you can be sure that equity release is the right option for you before proceeding. Your adviser will get to know your needs and wants and then make a recommendation of the best product and features to suit you.

There is no rush to make a quick decision when it comes to releasing equity but if you decide to go ahead on the recommendation provided by your adviser, they will be on hand to help with all the paperwork. The lender will have your property surveyed and then you will receive your Lifetime Mortgage offer.

A solicitor of your choosing will talk you through the terms of your offer before you commit. Once any secured charges or mortgages have been cleared, your funds are then transferred to you.

What are the alternatives to equity release?

There are a number of solutions commonly used by over-55s to boost their budget in retirement. Alongside equity release, many choose to downsize, remortgage, take out a conventional loan or utilise existing savings and investments.

Your adviser can explain exactly how releasing equity might affect you and will cover all of the available options, including the alternatives to equity release, before making a recommendation. Here are some of the advantages and disadvantages of a Lifetime Mortgage that they will help you to consider what is right for you when weighing up your options:

Advantages:

  • Your interest rates will be fixed for life.
  • Repayments are not required with a Lifetime Mortgage, but it is likely that providers of this type of equity release plan will allow you to make some should you choose to.
  • Unlike downsizing or releasing equity with a home reversion plan, you will always remain the owner of your home with a Lifetime Mortgage.
  • You will benefit from a no-negative-equity guarantee, meaning you will never owe more than the value of your property.
  • The money you release will always be tax-free, and you can choose to receive it as a single lump sum or as a smaller initial sum with the option to access more in the future.
  • Should you wish to move home you have the option to transfer your equity release plan in the future, subject to the lender’s criteria.

Disadvantages:

  • If you release more cash than you immediately need with equity release, interest charged on the amount borrowed will likely far exceed any earned from putting the extra cash into savings.
  • Your estate’s value will be reduced, leaving less to family or friends after you pass away.
  • Taking out an equity release plan may affect your eligibility for means-tested benefits.

Why choose Reader’s Digest Equity Release?

Our advisers have decades of experience under their belts. They have collectively helped thousands of over-55s to consider their options as the only service trusted by Reader’s Digest to provide equity release advice.

Reader’s Digest Equity Release will:

  • Provide a personal and local adviser who can offer no-obligation consultations to discuss your equity release needs, priorities, and preferences.
  • Lay out plans clearly, with respect shown to all alternatives to equity release.
  • Work at your pace, so you will never be pushed or under any obligation to proceed.
  • Ensure that every Lifetime Mortgage application is checked and approved by a second qualified expert so that you can be sure you are getting the very best advice.

What equity release deals are available?

In 2021, equity release product options reached a record high.

Increased choice can be daunting, but there is no need for growing flexibility to make the equity release process complicated. By filtering the offerings currently available on the market into a carefully selected panel of lenders, we have made sure that you have access to the most suitable products without the confusion of having to hunt for them yourself.

The goal of our panel is to ensure that you get the right equity release deal for your circumstances through exclusive products and features, without having to sacrifice market-leading advice and protection.

The trade body for the equity release industry is called the Equity Release Council. They aim to ensure the highest product standards. All of the lenders on the Reader’s Digest Equity Release panel are approved by the Equity Release Council, so you will be protected by their customer-focused safeguards.  

Use our free online equity release calculator today to see how much equity you could release.

Reader's Digest Equity Release is a trading style of Responsible Life Limited. Responsible Life Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register under reference 610205.

A Lifetime Mortgage will impact the value of your estate and could affect your entitlement to means-tested benefits. Think carefully before securing other debts against your home. To understand the features and risks ask for a personalised illustration.

Only if you choose to proceed and your case completes will Responsible Life Limited charge an advice fee, currently not exceeding £1,690. Our adviser will talk through the setting up costs of a Lifetime Mortgage before you make any decision to proceed.

Read more: Equity Release: What is a Lifetime Mortgage?

Read more: 10 facts that will answer all your Equity Release questions

Keep up with the top stories from Reader's Digest by subscribing to our weekly newsletter