Our FAQ’s section will help you understand some of the more common questions asked about releasing equity from your property.
If you still have any questions remaining unanswered, then please feel free to contact us on 0800 321 3156.
Do I qualify for an Equity Release scheme?
That depends on what kind of scheme you wish to proceed with. Lifetime Mortgages have an age requirement of between 55-95. Home Reversion plans have an age requirement of 65 upwards.
Equity release providers have their own requirement with regards to your minimal property value. The lowest acceptable property value is currently £70,000, with a maximum being at the discretion of each lender, with property location having a large bearing on the result.
Equity release providers are stricter on criteria than mortgage companies. The largest bearing on qualification is the property itself and the build type should mainly be of standard construction. Always inform your adviser should you be aware of any unconventional building material or notices contained within your lease as these could affect eligibility.
How much equity am I able to release?
This will depend on personal criteria & will be different for everyone. The two determining factors are the age of the youngest person on the deeds, and the value of the property. Each lender will have a set of loan-to-value ratio’s, that upon calculation will provide the percentage of the property value you can release.
For example, using Aviva’s Lifestyle Flexi plan; a male aged 65 & with a property value of £200,000 could release upto 23.5%. This would amount to a maximum equity release on this Aviva plan of £47,000.
For eligibility and a guide on how much equity you can release from your property, please use our equity release calculator.
Will I still own my property?
This depends on which equity release scheme is taken. With a lifetime mortgage you will still retain 100% ownership of your home.
However, the only time you lose complete ownership is if a home reversion scheme is applied for. You are able to sell a partial amount or 100% of your property with a home reversion plan in exchange for a lifetime lease.
What set up fees are charged?
Any initial consultation will be offered completely FREE of charge and under no obligation to proceed. During this meeting your adviser will provide an initial disclosure document explaining their status & fees charged.
Following this first meeting, your equity release adviser will then prepare a set of recommendations outlining the best advice for your circumstances & requirements. This will include the presentation of the Key Facts Illustration, which includes details of the plan and all the particular equity release companies set up charges.
Standard equity release application fees include a valuation fee, the lender application fee, solicitor fees & your financial advisers charge.
What is a Home Reversion?
With a home reversion scheme, the applicant may exchange a portion or full percent of their property in exchange for a tax-free lump sum or monthly installments of payments.
In return for this money your provider will take ownership of that portion of your house you have exchanged. However, in return you will receive a lifetime tenancy agreement, meaning you can live in your property until death or long-term care is needed. No rent would normally be required to be paid during your residence.
How long does it take to complete an application?
Once you have requested and signed your application form it will be sent off to the lender for approval. The first stage will be for the instruction for the valuation of the property by a surveyor.
Once this has been successfully appraised, then the equity release mortgage provider will issue an offer document, confirming exactly the details of the deal.
It is there upon down to the client’s & lenders solicitors to liaise & move forward to completion. The whole equity release process can take anywhere between 4-8 weeks, dependent upon the experience of the solicitor & lender selected.
Is there any way to speed up the application process?
Yes, there are multiple ways in which you can speed up the application process. This can be mainly accomplished by using an equity release brokerage with legal connections to experienced solicitors who have proven practices in matters relating to equity release.
With access to ERSA (Equity Release Solicitors Alliance) we have experience of how this can speed up the application process. With online tracking systems to monitor the progress of the equity release application, we are able to identify where any hold ups & therefore resolve issues as soon as they arise.
Secondly, there are arrangements in place with equity release companies where applications are ‘packaged’ before sending off to the respective lender. This means valuations can be instructed immediately, even before the equity release company receives the application. Therefore, once the valuation is completed & sent off to the lender, an offer is produced within 48 hours of receipt.
Am I restricted on what I can raise equity release funds for?
The proceeds from an equity release application can be spent on anything you wish. Lenders do not restrict criteria on the purpose of funds, although it is certainly advisable to get independent equity release advice from an FCA regulated adviser.
It would be more the manner of how you withdraw these funds & when they are taken that is the reason behind why ALL lenders will insist that equity release advice is taken.
What are the most common reasons for a release of equity?
In the current economic climate, equity release has had a major part to play in assisting retirees steady their finances and enable them to carry on enjoying their retirement.
Today, we are now seeing more practical uses for equity release UK plans, with family finances being resolved such as helping children in business, gifting them an early inheritance or providing a deposit to help them onto the first step of the property ladder.
However, the uses do not stop there; retirees may still need help with the provision of meeting long term care costs, inheritance tax planning, divorce settlement, home improvements or just to have some cash available to make life a little easier.
Which is the best Equity Release provider for me?
Each equity release company has its own set of criteria, some of which may suit one person, maybe not another. For that reason, no one provider offers the best equity release schemes. To establish which is the best equity release scheme for you, you should always seek independent advice.
It could be the fact that you require the lowest lifetime mortgage interest rate, in which case research would be rate driven & with the Aviva Flexible release plan having a starting rate of 5.57% AER, then this may suit.
However, it may be the case that you have a small immediate need for capital, yet a longer term demand for additional funds in the future. In this case a drawdown with the maximum reserve facility may be the best option.
It would only be by analysing your current situation, gathering all relevant data and understanding your requirements that a full assessment of which equity release provider would be best suited.
Where can I seek professional advice?
You search can start here with Equity Release 2go>> as we have independent equity release advisers with many years of industry experience. Always seek independent advice as there are many schemes including lifetime mortgages and home reversions to choose from.
Releasing equity from your property is an important & sometimes emotive decision, something which will eventually have an effect on your estate & beneficiaries. Therefore, selecting the right equity release plan, for the right reasons can save many thousands of pounds over the long term.
To find an equity release consultant based on location, then visit the independent www.unbiased.co.uk website where you can enter your postcode and identify your area of financial interest.
Can I still leave an inheritance for my children?
A release of equity from your property will always reduce the value of your estate. However, certain equity release schemes have options to build inheritance protection into your loan.
Consider the home reversion scheme. This has the guarantee that you can leave a fixed percentage of the final sale value of your property at the end of the day. Therefore, you are safe in the knowledge that your children will eventually receive a fixed inheritance.
Even some lifetime mortgage UK schemes now have inheritance protection options built into their plans. This can be set up from outset by fixing how much of the property you wish to protect for your beneficiaries. The size of this percentage could affect the initial amount you release, however at least you are able to secure an inheritance for your children.
Will my property qualify?
Equity Release 2go>> have access to the whole of the lifetime mortgage and home reversion market. Therefore, properties can be situated in England, Scotland, Wales or Northern Ireland.
The lowest property value acceptable between all lenders is £70,000 with no upper limit.
The construction type is paramount. Freehold properties built of brick and stone, with a tiled or slate roof being commonplace & acceptable. However, outside this criteria an eligibility check would be advisable.
Leasehold properties usually need a minimum term of 75 years, however this will depend on the applicants age(s), thus a calculation would be necessary. Ex-council houses will need verification along with flats over a certain number of stories. Concrete or timber-framed houses can be considered, however their age is usually the determining factor.
Unacceptable dwellings for equity release purposes would be mobile homes, houseboats, guest house or B & B’s.
How safe is equity release?
Equity release schemes are now regulated by the Financial Conduct Authority (FCA). This has replaced the FSA on 1st April 2013. This independent regulatory body governs the sale of both lifetime mortgage & home reversion schemes and reports to the government.
Additionally, companies providing equity release loans are themselves members of the Equity Release Council (ERC) which is the trade body representing the industry. Providers, solicitors and advisers are now able to join the ERC, whereas under the former regime – SHIP (Safe Home Income Plans) only equity release companies could join.
The ERC lays down a strict code of conduct, which companies, advisers and alike are duty bound to follow & maintain its required standards. Within this are protective features such as the inclusion of the no-negative equity guarantee, ability to port the mortgage to a new property & be able to repay the scheme at any time.
Who is responsible for property maintenance?
All equity release mortgages have the same principles in this regard. The person living in the property is still liable for keeping the property upto a satisfactory standard & carry out any remedial works necessary, at their own expense.
You will need to ensure the property is adequately insured, with a buildings insurance policy that has the name of the lender stated as having an insurable interest on the documentation. All bills must be paid such as council tax, utilities, but more importantly would be the ground rent.
These questions are about equity release schemes. To understand the features and risks of equity release mortgages, ask for a personalised illustration.