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Equity release mortgages

Find the right equity release plan with Fluent Mortgages

  • Direct access to experienced advisers

  • Find out how equity release plans work

  • Understand the pros and cons

What does equity release mean and how does it work?

Equity release is the process whereby you access some or all the wealth that is tied up in your home.

You can use an equity release product to release cash from the value of your home. You can do so by getting tax-free cash via a mortgage or by selling an interest in your home, while you continue to live there. Be aware, though, that boosting your available wealth in this way may affect your entitlement to means-tested benefits.

If you are considering equity release, it is important to discuss matters with your family. This is especially true if you intend to make them beneficiaries of your will. You must also take professional advice.

An equity release plan will reduce the value of your estate, so telling your family about your plans will avoid any nasty surprises further down the line.

What are the types of equity release mortgages?

There are two main types of equity release plan, so it’s important to consider which might be better for you. You will need to take expert advice before entering into an equity release arrangement.

Based on your needs and circumstances, you can opt for one of the following equity release mortgages:

  • Lifetime mortgage 

    This is when you take out a mortgage against the value of your property. The debt will then be repaid when it’s sold if you move (for example, into permanent care) or after your death. For most lifetime mortgages on the market, you must be at least 55 to be considered.

  • Home reversion 

    This is when you sell part of your home for a cash sum and continue to live there. The property will then be sold if you move (for example, into permanent care) or after your death. For most home reversion plans, you must be at least 65 to be considered.

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Your home may be repossessed if you do not keep up repayments on your mortgage.

What are the advantages of an equity release?

An equity release mortgage comes with an array of advantages. Here are some of the most prominent positives you can expect to benefit from:

  • Tick

    Get cash

    You can release wealth from your property and receive money either as a lump sum or as regular payments

  • Tick

    Use the money on what you want

    No restrictions on how you use the cash. You can spend it on whatever you wish, from paying off a mortgage to booking a holiday

  • Tick

    Choose where to live

    You can stay in your home until you pass away or choose to move into a long-term residential care home

  • Tick

    Might help reduce inheritance tax liability

    You can choose from a range of plans and it might help reduce inheritance tax liability

What are the disadvantages of an equity release?

As with everything, equity release has its own set of drawbacks. If you’re thinking about going down this route, you may want to take into consideration a few aspects:

  • Cross

    Might reduce the amount you can leave in your will

    Equity release could reduce how much you can leave in your will. In fact, as you’re already taking out some of the property’s value now, there will be less remaining for your estate when you pass away

  • Cross

    Potential restrictions on home adaptations

    It may come with restrictions on adapting your home. This is because lenders will want your home to remain in good condition, meaning you’ll need to keep it this way

  • Cross

    Could affect your entitlement to benefits

    It might affect your entitlement to benefits and help from your local authority

  • Cross

    Extra fees

    You are likely to incur substantial arrangement fees

Do I qualify for equity release mortgages?

When applying for equity release, you will need to meet specific eligibility criteria. Of course, every lender will have their own set of terms and conditions, but there are also some common points that mortgage providers share.

For instance, you should be able to take out equity release in the form of a lifetime mortgage if you’re a homeowner over the age of 55. If you’re thinking about borrowing jointly, with your partner or a good friend, you will both need to be at least 55 years of age.

What’s more, it is likely that your home will need to be worth at least £70,000 and in good condition. Not only that, but it is also important that the property you want to release equity from is your main, permanent residence. This means that you’ll be expected to live in that house for at least six months per year.

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Who are Fluent Mortgages?

To ensure you get the right equity release mortgages for you, MoneySuperMarket has partnered with Fluent Mortgages and their expert equity release advisors.

Fluent will need to speak to you regarding your requirements. 

You can contact them here or call 01204 937393.

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Compare mortgages with MoneySuperMarket

Comparing mortgage quotes can help you find the right deal for you. You can use MoneySuperMarket’s mortgage comparison tool to compare mortgages over a variety of different terms.

You’ll then be able to filter mortgage types by initial monthly cost to help give you an idea of the mortgage repayments you might be making.

It’s a good idea to factor in the cost of fees when comparing mortgages, as these can vary dramatically depending on the deal.

Keep in mind too that the quotes shown won’t take into account your financial situation and credit history. So if you decide to proceed with getting a mortgage in principle offer, as well as an actual mortgage offer, the rate and terms you’re offered may be different.

There are no restrictions on how you can spend the proceeds of equity release. You can:

  • Supplement your pension

  • Adapt your accommodation

  • Pay for a holiday

  • Clear your mortgage

A lifetime mortgage is when you borrow against the value of your home. You retain ownership of the property and can continue to live in it until you die or move into permanent care (this applies to the second person in a couple). At this point, the property is sold and the mortgage is repaid.

With some lifetime mortgages, mortgage interest is added to the capital debt and rolled up. With others, you can make monthly payments to clear the interest as you go.

With a home reversion, you sell a portion of your home for a price below the market value. When you die or move into permanent care (this applies to the second person in a couple), the property is sold. The proceeds are then divided between you/your estate and the plan provider.

If your home is worth £300,000 and you decide to sell 30% (£90,000 worth) via a home reversion, the plan provider may agree to pay you, say, £50,000.

When the property is sold, the company is entitled to 30% of the sale price. If the house has increased in value to £400,000, for example, it will receive £120,000. If the property has fallen in value to £200,000, it will receive £60,000.

Yes. Lifetime mortgages and home reversion plans are regulated by the Financial Conduct Authority, as are the companies that offer them. 

Most (over 90%) of the companies in the equity release sector belong to the Equity Release Council, which promotes high standards of professional practice among its members.

Members of the Equity Release Council, which represents around 90% of the market, attach a ‘no negative equity’ guarantee to the plans they sell. This means that, if the value of the property falls below the level of the debt, the company takes the hit and won’t pursue you or your estate for the shortfall.

Boosting the amount of cash you have could affect your entitlement to means-tested benefits, such as the pension credit and universal credit. It is important to work out how you might be affected before you take the plunge with equity release.

This tends to depend on the lender and on your own personal circumstances. But you can generally expect equity release to take between six to eight weeks.

Bear in mind, though, that it may sometimes up to 12 weeks.

Let your family know what arrangements you make regarding your home

Always take expert advice before committing to an equity release plan

Make sure your equity release plan has a ‘no negative equity’ guarantee

Check to see whether your entitlement to state benefits will be affected

There are no restrictions on how you can spend the money you raise

There may be restrictions on the type of work you can have done to your home

So how do we make our money? In a nutshell, when you use us to buy a product, we get a reward from the company you’re buying from.

But you might have other questions. Do we provide access to all the companies operating in a given market? Do we have commercial relationships or ownership ties that might make us feature one company above another?

We commit to providing you with clear and informative answers on all points, so we have gathered the relevant information on this page.

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