Releasing equity from your home is a big financial decision that can have a positive impact on your lifestyle throughout retirement, although it isn’t suitable for everyone. Over the last few years, the number of product options available to borrowers has increased significantly. There is now more choice and flexibility that accommodate a wider range of individual circumstances.

What’s more, in the last decade equity release interest rates have dropped from around 7% to just 4%, with some rates as low as 2.40%.

How to release equity from your home

There are several steps to take to release equity from your property. During the process, borrowers have to seek both financial and legal advice. Here are some of the first things you should do:

1. Check whether you’re eligible to release equity from your home. While there are a number of factors that determine eligibility, you must be a homeowner aged 55 or more, with a property worth at least £70,000.

2. Find out the current value of your home – this will affect how much equity you can release.

3. Speak to a financial adviser to determine whether releasing equity from your property will affect your tax position, or your entitlement to state benefits.

4. Speak to an equity release mortgage broker, like Personal Retirement Planning, who can advise on the most suitable options available to you from a wide range of equity release lenders.

5. Compare the equity release plans that are available to you.

6. If you decide equity release is right for you, you have chosen a plan, and your lender has agreed to lend you the money, you will need to seek legal advice from an equity release solicitor. This is a requirement of the Equity Release Council – the regulatory body for the UK equity release industry.

How does equity release work?

Equity release is a loan secured against your property. It allows you to access cash that is tied up in the value of your home without having to sell, downsize, or remortgage.

There are hundreds of options available that allow you to:

  • Make regular monthly repayments
  • Make no monthly repayments
  • Pay some of the interest, all of the interest, none of the interest, or more than the interest
  • Take one lump sum
  • Take several smaller sums over a period of time

You can continue living in your home for as long as you choose and can move to another property if you wish. The loan plus interest is repaid when you sell the property, move into long term care, or pass away.

An equity release mortgage broker can recommend the most suitable products based on your individual circumstances.

To learn more about how equity release works, check out our FAQs here.

How much equity can you release?

How much equity you can release from your property is dependent on several factors including:

  • Property value
  • Outstanding mortgage amount
  • Your age
  • Health
  • Lifestyle

Generally, the older you are, the more equity you can release. You can find out how much equity you could release from your home using our free equity release calculator.

At Personal Retirement Planning we are equity release mortgage brokers and can help to manage the process from start to finish. We are a member of the Equity Release Council and only recommend plans that are approved by them. To start your equity release journey, give us a call on 0203 435 9561 or email info@prpltd.co.uk.

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