Equity Release
Unlock cash from your home and enjoy a more comfortable retirement
What is Equity Release?
If you are 55 or over, equity release is simply a way of unlocking the value of your property and turning it into tax-free cash. Think of it as a loan that’s repaid using your home once you pass away or require long-term care. Equity release is often taken through what’s called a lifetime mortgage (sometimes known as a later life mortgage).
You don’t have to sell your home or move out with a lifetime mortgage, and you can enjoy spending the money. Depending on which equity release product is right for you, you may get your money as a lump sum or a series of regular, smaller payments.
Whether you want to renovate, help your grandchildren with university fees, or take that once-in-a-lifetime holiday you always wanted – equity release can help make that happen.
Please be aware that taking out equity release will reduce the amount of inheritance you leave behind.
Want to learn more?
To find out how much equity you could release call our experts today.
Lines open: 9am to 5pm Monday to Friday
TextDirect: First dial 18001
We may record and / or monitor calls for training and audit purposes.
Written by real people
All of our Equity Release content is approved by our in-house expert advisory panel.
Please note that the information given on these pages should not be seen as advice to take out this product.
Types of equity release
Lifetime mortgage option
You borrow money from your equity release provider and use your home as security. This is the more common way of taking equity release.
Home reversion plan
You sell a share of your home’s ownership to the equity release provider for less than the market value.
At LV= we don’t currently offer advice on home reversion plans.
Types of Lifetime Mortgage
Lifetime Mortgage Lump Sum
If you need to release equity for a specific one-off expense such as home improvements or to pay university fees, it may be better to borrow a one-off lump sum.
Lifetime Mortgage Drawdown
Rather than just receiving a one-off lump sum, a drawdown lifetime mortgage gives you the option to release your cash over time, as and when you need it.
Things to consider before taking out a lifetime mortgage
- The money you release from your home could affect any means-tested benefits you’re entitled to now or in the future.
- The money you release is paid back after you die, from your estate. This means the size of your estate, and the amount you can pass on to your loved ones, could go down.
- The money you release from your home is a loan, and interest will be repaid when you die or if you move into long-term care.
- You have to take advice to release equity from your home. Initial advice is free, and there is no obligation. If you decide to go ahead and your case completes, our advice fee of £1,795 would be payable. Other lender and solicitor fees may apply.
- If you choose a lifetime mortgage with a drawdown option, the interest rate set on any drawdown is done at the point of the drawdown, rather than when you took out the lifetime mortgage. This can mean you could pay more interest, depending on economic circumstances.
- Equity release requires paying off any existing mortgage.
- Taking equity release is likely to affect the amount of inheritance your beneficiaries will receive. It’s important to discuss these decisions with them, as they may have a preference.
- Most lifetime mortgages require you to be at least 55, although some may require you to be over 60. The earlier you start, the less effective equity release can be, as amount of money to pay off when your mortgage ends will be greater.
- Some lifetime mortgage providers may let you repay some or all of your interest. If there is a repayment option during your lifetime mortgage, you will need to undergo an affordability test to ensure that you can meet required payments.
- You are not required to make repayments, therefore the loan plus interest can grow very quickly.
Understanding Lifetime Mortgages
Lifetime mortgages aren’t for everyone, so it’s important to understand what they can offer you, as well as factors you should consider.
Advantages of lifetime mortgages
Equity release offers retirees a range of options, as well as allowing them to remain in their own home.
- Get a tax-free cash lump sum.
- With a lifetime mortgage, the tax-free cash can be taken as either a lump sum or you can 'draw down' the money as income depending on the option you choose.
- You still own 100% of your home with a lifetime mortgage.
- If you pay off your current mortgage with the lump sum, you can choose to spend the leftover cash in a variety of ways.
- The Equity Release Council’s no negative equity guarantee means that, where applicable, you won’t owe more than the value of your home when it is sold.
- You may be able to move home after taking equity release.
- There are many flexible options available for making repayments during the lifetime mortgage, including covering all the interest each month.
- Under the Equity Release Council standard, a variable interest rate must have an upper cap for the entirety of the loan.
Equity Release eligibility
Not everyone is eligible for equity release, and each case is reviewed individually to ensure you meet the right criteria and are right for equity release.
The minimum equity release requirements are:
- You must be 55 or over
- Your home must be in the UK
- Your home must be worth at least £70,000
Your home may not be eligible if:
- The property build is non-standard, such as prefab, a wooden or steel frame
- If it is a leasehold property, how long the remaining lease is, and whether there are any issues with the lease
How do you apply for Equity Release?
Equity release isn’t like a mortgage you may have got when you first purchased your house. We’ll go through the equity release process, so you know what could happen if you take your interest further.
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Seek financial adviceIf you’re looking into equity release, then it’s always wise to seek financial advice first, as it may not be the best way to fund your retirement. A financial adviser will also be able to give you regulated, unbiased advice on the best product on the market for you and your finances.
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Appoint a solicitorLike when you buy a house, you’ll need to appoint a solicitor to act on your behalf in the process of applying for a lifetime mortgage. They will go through the process of working with your chosen lender, from organising valuation and assisting you through the administration process.
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Arrange a valuationYour chosen lender will require a valuation to be carried out on your property. You will need to ensure someone is available to meet with the surveyor.
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Receive the fundsIf your application is successful, and all parties are satisfied, the lender will release the funds to your solicitor who will provide you with the money as agreed.
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Enjoy your retirementOnce you’ve got the funds, you can make the most of your retirement, whether that’s spending time with loved ones, going on your dream holiday, or learning a new skill. It’s up to you!
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Why choose LV=
Everything we do at LV= is focused on finding you a suitable plan through our whole of market equity release advice service. By doing this, we enable people to live financially confident lives.
The Equity Release Council - The equity release products we advise on are protected under the Equity Release Council’s No Negative Equity Guarantee. This means you won’t owe more than the value of your home when you pass or move into long-term care.
A team full of experience - We have over 50 years of collective experience in our team of expert equity release advisers.
The full support of a trusted mutual - Our financial advice is backed by the strength and scale of LV=, with over 180 years of expertise in the financial services market.
Important information about Equity Release
Here’s the need to know info, so you have the full picture
- Releasing cash from your home will reduce the value of your estate and may affect your entitlement to state benefits.
- These are lifetime mortgages. To understand the features and risks ask for a personalised illustration.
- Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property and may reduce the value of your estate and impact funding long-term care.
Please note, at LV= we don’t offer a home reversion plan option.
Choosing the most suitable product will depend on a number of considerations, including:
- How much equity needs to be released and in what form.
- The value of the property.
- The age of the homeowner.
- How much, if any, the homeowner wants to leave as an inheritance.
The equity release products we advise on are protected under the Equity Release Council’s No Negative Equity Guarantee. This means you won’t owe more than the value of your home when you pass or move into long-term care.
Financial Advice on equity release
Need help?
We’re here to help, have a commitment-free chat with one of our friendly advisers today.
Lines open: 9am to 5pm Monday to Friday
TextDirect: First dial 18001
We may record and / or monitor calls for training and audit purposes.
Alternative options to equity release
Equity release isn’t right for everyone, and there may be alternatives available that are better suited to your circumstances.
Downsizing your property
Instead of taking out a lifetime mortgage on your current home, moving to a smaller home or less expensive part of the country could be an option to explore.
Other mortgage products
Depending on your age and circumstances, you may be able to explore other mortgage products or secured loans. Our advice team will be able to help you understand what your options could be.
FAQs on Equity Release
There are often fees associated with equity release, from advice fees to product fees. This will vary from provider to provider, but your adviser will be able to provide exact fees for the products you are considering.
At LV=, our advisers provide initial advice for free and without obligation. If you choose to proceed and your case completes then we have an advice fee of £1,795. Other lender and solicitor fees may also apply.
Yes, there are certain properties that are unlikely to be acceptable for equity release. These include:
- studio or basement flats
- flats of maisonettes in a local authority or housing authority block of more than four storeys
- retirement properties
- static/mobile homes
- houseboats
- farms
- hotels
- guest houses/B&Bs
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