FAQ: Equity Release Schemes

Are there any equity release schemes for people younger than 55?

Tue, 04 May 2010 04:39:24 GMT

I am 65 but have a wife who is only 53, are there any equity release schemes available to people younger than 55?

This will depend on what you want and can afford. Specialist equity release schemes where you do not make an monthly repayments, such as roll up lifetime mortgages or home reversion plans are only available where the younger partner is aged 55 and between 63-65 for home reversion plans. However, if you can afford to make monthly repayments not only now, but once you and your wife reaches retirement, you may be able to release some equity by doing an ordinary mortgage but you need to remember that your home is at risk if you do not keep up any repayments.

An interest only lifetime mortgage will still give you the right to remain living in your home for the rest of your lives providing you keep up repayments. The amount you can borrow will normally be determined by how much your post retirement income will be with lenders applying either a multiplication of your joint projected retirement income or on affordability.

One problem with such mortgages are that most lenders will expect the mortgage to finish by the time you reach 75 or 80. Therefore if you do a repayment mortgage, due to the short term, the monthly repayments could be too expensive for you, or if you did an interest only mortgage, either you would have to downsize or look towards an equity release scheme to release enough to pay back the mortgage lender at that time and/or possibly provide you with some additional money. However, you should remember that future availability of equity release schemes cannot be guaranteed, nor can house prices, so depending on how much you might borrow on an interest only mortgage, it may be impossible to obtain sufficient money from an equity release scheme to repay the mortgage when the lender request it.

Advice on interest only lifetime mortgages.

Unlike some other equity release advisers who may only offer roll up lifetime mortgages and home reversion plans, The Equity Release Centre also offers impartial advice on interest only mortgages. So no matter your age we are able to help. If you would like to speak to someone about interest only mortgages, simply complete our short online enquiry form and we will call you back, or call us on FREEPHONE 0800 972 4883 please call us.

What's the best equity release scheme?

Wed, 05 May 2010 10:54:44 GMT

I am considering releasing some equity out of my property, what's the best equity release scheme for me?

There is no right or wrong answer to this question. Which is best will depend on many factors such as:

Your age.
How much money you want.
What your attitude is towards consuming equity in your property or selling ownership.
Whether you are able and willing to make monthly repayments of interest. If so an interest only lifetime mortgage may be ideal as it will preserve more equity in your home.
Your view of future house price inflation. If you are pessimistic, you may not like a roll up lifetime mortgage but prefer either an interest only lifetime mortgage or home reversion plan.
Your health. If you feel you may live a long time you may prefer a fixed repayment lifetime mortgage, or home reversion plan to a roll up lifetime mortgage. Alternatively if you feel you may not live a long time and want to leave as much money to beneficiaries as possible, you may be happy to consider a roll up lifetime mortgage.
Whether you want to guarantee that a certain percentage of your home will always be available to use yourself later in retirement or to leave to beneficiaries. If so, you may prefer a partial home reversion plan where any remaining share, not sold initially, would be retained by you and could be sold later to raise more money or be left to your beneficiaries.

Everyone has differing needs and therefore no one equity release scheme can hope to be the best.

Whilst you can use this website to get generic information on all of the different types of equity release plans available today and can find out approximately how much you might be able to release from your home, by using our online equity release calculator, it is no substitute for receiving professional impartial advice.

Impartial advice on equity release.

If you would like to benefit from an initial free, no obligation home consultation, with a professional adviser, simply complete our short online enquiry form and we will call you back to discuss a suitable appointment. We will then be able to help you evaluate whether equity release would be right for you and providing it is, to recommend an equity release scheme which best meets your needs.

What is a reverse mortgage?

Wed, 05 May 2010 09:30:34 GMT

My brother in America has suggested I consider a reverse mortgage to raise some money from my house, what is a reverse mortgage?

A reverse mortgage is a description used in several other countries such as USA and Australia to describe what we call lifetime mortgages in the UK.

A reverse mortgage or lifetime mortgage is an equity release scheme which allows homeowners aged 55 plus, to release some of the equity in the property and receive either one lump sum or a facility to drawdown over time. Unlike ordinary mortgages, roll up lifetime mortgages allow you to choose to defer repaying any interest until you or the last applicant dies, sells the property or moves into permanent long term care.

To discover more about lifetime mortgages visit lifetime mortgages.

What is SHIP?

Sat, 08 May 2010 12:05:57 GMT

I have been considering doing equity release and been told to ensure any sheme is SHIP approved. What is SHIP and why is it important that any scheme is approved by them?

Safe Home Income Plan (SHIP) is a trade body established in 1991 by leading equity release providers, to raise the standards of equity release.

SHIP is dedicated entirely to the protection of planholders and the promotion of safe home equity release plans. Its members subscribe to their code of conduct which provides strict criteria that firms need to meet in order to be a member and for their literature to display the SHIP logo.

The reason why you should look for a SHIP approved plan is that all SHIP approved plans offer you the following guarantees:

To allow you to remain living in your property for life.
To provide you with fair, simple and complete description of the plan. This means that the benefits and limitations of the product together with any obligations on the part of the customer should be clearly set out in their literature.
The right for you to move your plan to another suitable property without any financial penalty.
Before any provider will release any money, your solicitor has to certify that they have explained the implications of the scheme to you and that you fully understand the risks and benefits of the scheme.
All SHIP plans carry a no negative equity guarantee. This means that you will never owe more than the value of your home and that after any property is sold you can never leave a debt for beneficiaries to inherit.

For your reassurance we only advise and recommend plans which meet these standards.

How much could you release via a SHIP approved plan?

Apart from offering you valuable assurances SHIP approved plans also offer you some of the largest amounts available. Why not see for yourself by trying our free online equity release calculator.

Find out more about SHIP

If you would like to find out more about SHIP, visit safe home income plans.

Equity release on sheltered accomodation?

Sun, 09 May 2010 07:28:00 GMT

Can you do equity release on sheltered accommodation?

The answer to this will depend on the terms of any lease and therefore difficult to answer without without knowing more.

We currently have a few lifetime mortgage equity release providers who will consider them subject to examining the terms of the lease.

As these properties are deemed to be less marketable, most lifetime mortgage providers will reduce either the market value of the property before they apply their standard age related percentage to the reduced value, or will reduce their standard age related percentage before applying it to the full market value. Either way it will reduce the figures which our online equity release calculator comes up with.

No SHIP approved home reversion providers are currently willing to lend on such property.

Find out how much equity you could release.

If you have a private sheltered property and would like to find out whether we could help, please call us on FREEPHONE 0800 970 4882 or complete our online enquiry form and we will call you back just as soon as possible.

Can you release equity on second homes or let property?

Sun, 29 May 2011 06:53:16 GMT

Can you release equity on holiday homes or let property?

The answer to this is yes providing you or youngest applicant are over 55.

We currently have a couple of SHIP approved equity release lender providers who will consider releasing money on holiday homes situated in England, Scotland or Wales (providing worth more than £60,000 and you do not live in it), and currently one if you have an investment property situated in England or Wales and the property is worth more than £100,000.

If you have an investment property portfolio, you can even consider releasing money on up to 5 different properties (subject to criteria), but each would have to have either no existing mortgage or only a small one (less than could be released) on the property. No DSS or multiple let properties will be considered however, nor will any where the landlord or their family lives in or rents the property. Family members include spouse or partner, brother, sister,child, grandparent or grandchild. We would also like to point out that in the case of investment property equity release they are not regulated by FSA and as such you are not offered any protection under the Financial Services and Markets Act 2000.

The amount or percentage of the property they are willing to lend based on your age, may be lower than the figures which our online equity release calculator calculates.

Find out how much equity you could release.

If you have a second home or own a property you let out and would like to find out how much equity you could release, try our equity release calculator or simply check whether we could help, please call us on FREEPHONE 0800 970 4882 or complete our online enquiry form and we will call you back just as soon as possible.

Equity Release on high value or luxury property

Sat, 04 Jun 2011 07:23:35 GMT

Where can I find an equity release lender willing to lend on my property, worth in excess of £1million?

Due to not wanting to over expose themselves to just a small number of high valued or luxury properties, most equity release lenders will only lend on property worth less than £1 million or restrict waht they will lend based on a maximum property value of just £1million.

We are pleased to say that due to our considerable experience in dealing with high value properties and our specialist database of lenders criteria we are confident that subject to your specific property details and valuation, we should be able to find you a SHIP approved equity release lender willing to lend, providing amongst other factors:-

You, or (in joint applications- you are both) over 55.
The property is your main property and is located in mainland England, Scotland or Wales.
It is freehold or leasehold with at least 80 years remaining.
The property is not sub let or converted into flats.
The land does not exceed 20 acres.
It is not used for commercial purposes.

Not only this but on properties in excess of £1.5 million or loans taken in excess of £500,000 we will waive our usual advice fee and just accept the commission - meaning you benefit from a further 1.5% on the loan amount applied for, whilst still providing you with a personal and discrete service.

Find out how much equity you could release.

Due to the individual nature of such properties, to find out exactly how much you could release, please call us on FREEPHONE 0800 970 4882 or complete our online enquiry form and we will call you back as soon as possible.

Can a Power of Attorney take out equity release?

Sun, 05 Jun 2011 09:16:11 GMT

I am Power of Attorney for my mother, can I take out equity release for her to help her pay for care at home?

Most lenders do allow this providing your power to be your mothers attorney has been registered by the Public Guardianship Office. If it hasn't they would expect your mother to still apply in her own name but this would mean she would have to be able to fully understand what she is doing which could be an issue.

One thing you need to be aware of however, is that should you also be a joint owner of the property (under Tenancy in Common) they wouldn't allow you to sign for equity release, as you would be personally signing for both your share of the property and also your mother's. In such circumstances you couldn't proceed unless there is also a second, joint Power of Attorney who has no legal interest in the property who could then sign on behalf of your mother's interest.

Arranging a Plan

If you are legally entitled to act and would like to proceed with releasing equity, we have considerable experience in such cases and would be pleased to help. To arrange a free home consultation, please call us today on Freephone 0800 970 4883 or complete our online enquiry form and an experienced consultant will call you back just as soon as possible.

Mortgages for the retired.

Mon, 06 Jun 2011 11:09:46 GMT

Can I still get an interest only mortgage even though I am retired?

Yes - It is a popular misconception that once retired you are unable to obtain a mortgage but this is wrong, providing your pensionable income or alternatively your age and property value is sufficient.

Obviously it is important that any borrowing should remain affordable just on your pensionable income.

We have access to a couple of mortgage lenders who are still willing to lend interest only mortgages to people already retired. However even if you feel the payments would remain affordable, there are potential drawbacks to using such schemes for equity release. These include:-

Most ordinary lenders will expect the mortgage to finish by the time you reach 75 or 80. Therefore if you do a repayment mortgage, due to the short term, the monthly repayments could be too expensive for you, or if you did an interest only mortgage, either you would have to downsize or look towards an equity release scheme to release enough to pay back the mortgage lender at that time and/or possibly provide you with some additional money. Of course the future availability of such schemes to pay back any mortgage cannot be guaranteed to be available in the future.
The amount you can borrow on ordinary mortgages either starting only after retirement or go beyond retirement, will normally be determined by how much your post retirement income will be with lenders applying either a multiplication of your joint projected retirement income or on affordability. This may not be sufficient for your needs.

What is an Interest Only Lifetime Mortgage?

An interest only lifetime mortgage unlike ordinary interest only mortgages will give you the right to remain living in your home for the rest of your lives providing you keep up repayments and one of the lenders, even allows you to stop making repayments of interest on either part, or all, of the mortgage, at anytime if you decide you can no longer afford the repayments.

If you decide to do this, the interest will then accumulate on a roll up basis, meaning that from that day forward the debt you would need to repay on last death or move into care would become greater. If you would like to read more about interest only mortgages which run for the rest of your life, please see interest only lifetime mortgages.

Still don't qualify?

Should you be only 55+ or your current, or projected, gross pensionable income isn't enough to justify the amount you want to borrow, providing you still have sufficient disposable income each month to realistically afford the repayments, we also currently have a specialist equity release provider who may be able to help.

They will offer a Lifetime Mortgage on an interest only for life basis, (providing you live in England and Wales). The amount they will offer is based on your age (youngest in joint life cases) and property value, not income. They also provide you with the reassurance that should you start to struggle to pay the interest you can make a final decision to stop making repayments and roll up the interest instead.

Find out how much you could borrow?

If you live in England or Wales and would like to find out how much you could borrow on an interest only mortgage from this specialist equity release lender, please use our free equity release calculator. If you live in Scotland or simply would prefer to discuss your requirements with us, please call us on FREEPHONE 0800 970 4883

Further information

Further information about interest only mortgages is available, please visit interest only mortgages.