Equity Release – Frequently Asked Questions

Frequently Asked Questions about Equity Release

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How do I know if I qualify for an equity release scheme?


You will usually qualify for an equity release plan if you:

  • Are aged between 55-95
  • Own your home with little or no outstanding mortgage
  • Your home is worth £50,000 or more

If I decide to go for equity release, what is the process involved?


You decide if equity release is the right solution for you by talking to an independent advisor – you will need to consider alternatives such as downsizing first.

  • You decide if you want to go for a lifetime mortgage or a home reversion scheme
  • You decide if you want to take the cash as a lump sum, regular income or both
  • Decide if you want to take the full amount at the start or if you want to stagger it and take it as and when you need it.

You speak to a specialist about the best equity release scheme for your circumstances.

What if I change my mind after taking out an equity release scheme?


Due to the fact that it takes at least 2 months to get all the paperwork ready for any scheme, you have plenty of time to consider the advantages and disadvantage involve before mailing a final decision.


You cannot cancel a home reversion scheme, but you can cancel a lifetime mortgage, although it will probably be subject to a penalty. Therefore if you think you may want to cancel the scheme in the future, e.g. you are expecting to receive an inheritance in a few years time, you should take out a lifetime mortgage rather than a reversion scheme.


Are equity release schemes regulated?


Since 2004, Lifetime Mortgage and Home Reversion schemes have been regulated by the Financial Services Authority (FSA).


Most equity release providers also sign up to the SHIP ('Safe Home Income Plans) Code of Practice. SHIP members agree to follow a voluntary code of practice, undertaking to provide a fair, safe and complete presentation of their schemes to potential clients. You should ensure that the equity release provider you choose is a member of SHIP.


What costs are involved with equity release?

You will have to pay solicitor's fees; the costs of having your home valued by a surveyor and possibly also an admin fee charged by the equity release provider.


Who pays for repairs to the house?

With both lifetime mortgages and home reversion schemes, the responsibility for maintenance of the hose still lies with you. You will also still have to pay all your bills e.g. utilities, insurance and Council Tax.


Will my state benefits be affected if I take out an equity release scheme?

Yes, they could be. A scheme may reduce your entitlement, you should check on this before you take out any scheme, as it may leave you less well off than you first thought.


Will I be able to live in my own home until I die?

Yes, all schemes should guarantee that you, and your partner, will be able to continue living in your home for the rest of your lives. If however, you took the scheme out in only one name ad that person died, the property would have to be sold and the partner would have to move out. It is therefore advisable to take the scheme out jointly, and only take out a scheme where you are given a guarantee that you can live in your home for the rest of your lives.


Will I be able to move home in the future?

Some scheme offer the option of moving, some don’t. If you think you may want to move in the future, you should get advice and ensure you have chosen a scheme that allows it – many will allow a transfer of the equity release plan to a new property.


There may also be a penalty if you want to end the scheme before your death - for example if you sold up completely to move into a care home or rented sheltered housing – check the policy details.


How will I be affected if property prices change?

If you have a lifetime mortgage, the only affect of changing property prices will be the inheritance you leave behind. If prices go up, the value of your home will increase and will be worth more when it is sold after your death, so your family will gain.


If prices fall, your heirs will inherit less.


If you have a home reversion scheme and sell all of your house, only the company that bought it will be affected by property prices. F you sold part of your home, both you and the company will be affected.


Will my children or grandchildren be left with debts?

If house prices fall significantly, your children or grandchildren may not inherit anything, however, if the property is worth less than is was when the mortgage was taken out, they will not be liable for any shortfall.


Download Equity Release Frequently Asked Questions (35kB)

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Equity release may affect your entitlement to state benefits and will reduce the value of your estate. It may involve a lifetime mortgage or home reversion plan. All content set out in this website is provided for information only and should not be considered as advice. It is strongly recommended that you seek advice of a qualified, independent financial advisor before making any decisions to take out an equity release product.