A quick overview of equity release
Equity release is a type of finance, similar to a mortgage, that allows homeowners aged 55 or older to unlock the cash tied up in their property without the need to sell. This provides a tax-free lump sum that can be used to boost retirement income, fund major expenses like a dream holiday, or help children get on the property ladder.
You can read more about how it works in our complete guide to equity release.
How equity release is different to a regular mortgage
The differences between equity release and a standard residential mortgage are as follows:
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Equity release is specifically designed for older borrowers
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There are no mandatory monthly payments
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Enhanced terms are available for those with serious health conditions
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You must be a homeowner to qualify for equity release
How much equity you can release
The main factors that determine the amount of equity you can release are your age, the property value and the loan-to-value ratio. The older you are, the more you can typically release. This table shows how the amount varies based on these variables.
|
Property Value |
Age (based on youngest homeowner) |
Amount you could release |
Maximum loan-to-value (LTV) |
|
£250,000 |
65 |
£107,500 |
43% |
|
£500,000 |
60 |
£190,000 |
38% |
|
£750,000 |
70 |
£360,000 |
48% |
|
£1,000,000 |
55 |
£310,000 |
31% |
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FAQs
No, the cash you release is tax-free. However, if you invest that money, any income or interest generated from the investment might be taxable. It’s important to discuss your plans with a financial advisor.
Connect with an equity release specialist today
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
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