Here are some common questions about equity release
What is a lifetime mortgage?
A lifetime mortgage isn't that different from the standard mortgage you probably took out when you first bought your home. It's a loan secured against the value of your home on which interest is charged.
However, unlike a standard mortgage, there are normally no monthly instalments to pay (although some providers may require you to pay the interest on the loan).
With both equity release products from LV=, the interest is added to the loan to be repaid on the death of the borrower or if the borrower goes into permanent residential long term care. The loan is usually repaid from the proceeds received from the sale of the property.
This is a lifetime mortgage. To understand the features and risks, ask for a personalised illustration.
Read more about our lifetime mortgages.
How much can I borrow?
The maximum you can borrow depends on your age and the value of your property.
With LV=, our Lump Sum+ product allows you to borrow a lump sum as a one-off payment. The maximum you can borrow ranges from up to 18% of the value of your property if you are 55, to 53% if you are 90 to 95.
Under our Lifetime Mortgage Drawdown+ product, you can choose to borrow a smaller amount initially and agree a maximum loan with us, which you can draw on from time to time. This way you'll only be borrowing, and therefore accruing interest on, the amount you actually need. The maximum you can borrow ranges from up to 18% of the value of your property if you are 55, to 53% if you are 90 to 95.
Will I still own my home?
Can I move house after taking out Equity Release?
A lifetime mortgage is a long-term commitment, therefore if you are considering moving / downsizing in the near future equity release may not provide the best outcome. If you are unsure we would recommend you discuss your situation with your adviser.
However, if you decide to move, you must apply to transfer your lifetime mortgage as soon as you have found a new home and before you intend to move. Your new home must be in England, Wales or Scotland and will be owned by you. A valuation will be required on the new property. Based on this valuation, we will assess your new home against our lending criteria which applies at the time. Our lending criteria may be different from those applied at the time of your original lifetime mortgage offer. If you would like to discuss our lending criteria and what types of properties are not acceptable, please contact us on 0800 028 8974.
The ability to transfer your lifetime mortgage is not guaranteed and will depend on your new home being accepted by us. If, following the valuation, your new home does not meet our lending criteria and you still decide to move, you must repay your lifetime mortgage as part of the sale of your property. You may have to pay an early repayment charge.
If your outstanding balance exceeds the maximum amount we are able to lend you, we may ask you to make a partial repayment to allow the transfer of the mortgage to take place.
Where a partial repayment is required to move, we won't charge you any penalties on this given amount. Please note, there will be an application fee and valuation fee to pay. You will be responsible for paying your own legal fees and all other moving costs. Valuations will be charged at the rates applicable at the time.
Will I pay tax on the money that I've borrowed?
Under current tax rules, if you borrow money on your house you don't pay tax on it and there is no stamp duty to pay.
But remember that tax rules do change from time to time. Any references we make to taxation are based on our understanding of current legislation and HM Revenue and Customs practice, which can change.
Borrowing may also impact state benefits, so ensure you seek advice to fully understand tax and benefit implications on borrowing.
How do I know if equity release is right for me?
To find out if equity release is right for you, you might want to follow the 6 steps below:
Step 1: Advice
Find an equity release adviser you feel comfortable with. Your adviser will assess your personal situation and help you consider the alternatives of releasing income or capital that do not involve losing some of the equity in your home.
Step 2: Talk to your family
Discuss equity release with your family and intended beneficiaries to your will. They might be able to help you raise the money you need.
Step 3: Personalised Illustration
Based on your individual circumstances, your equity release adviser will prepare a personalised illustration for you to tell you exactly how equity release could work for you.
Step 4: Independent legal advice
If you don’t already have a family solicitor, find one who specialises in equity release. Your solicitor will not only sort out all the legal details but will make sure you fully understand how the lifetime mortgage works and all the implications before you go ahead.
Step 5: Application, valuation & offer
Once you and your adviser have decided on the right product, your home will be valued and you will be sent an offer detailing exactly how much equity you can release.
Step 6: Completion
If you are satisfied with all these details you can agree to take out an Equity Release product. Once you have signed the required documentation you will receive your money.
See our comparison table to help you decide which equity release product is best for you.