How much equity can you release from your home with equity release?
We often get asked how much equity I can release?
Equity release is a way to unlock cash from your property if you are over 55 and have your own home. How does equity release work? What are the pitfalls? What are the alternatives?
This comprehensive guide to equity-release mortgages covers all these topics. In our FAQ section, you will find answers to the most common questions.
By clicking the link below, we can answer questions about equity release products and how much equity release you could be allowed from the property value and introduce you to equity release lenders.
What’s an equity release mortgage?
An equity release lender gives out equity release mortgages, enabling homeowners over 55 years old to access and release cash held in their homes. Equity release is borrowing equity that you have built up through your mortgage. It can be released in cash lump sums, small instalments, or a combination.
A lifetime mortgage is the most popular form of equity release.
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What does it mean?
You can take equity release via a lifetime mortgage. This would allow you to borrow the equity in your home by securing a loan against it.
The property will remain yours, and interest will accrue over the term.
Click the link below to discuss a lifetime mortgage or find out how much equity you can release. You may have used our equity release calculator online for an estimate but now require further information.
Borrowers’ obligations
You have the option to pay interest or not, but certain things must be done.
These include:
- The property must be insured
- It must be kept in the same mortgage name.
- It is not allowed to be left empty or unused.
- It shouldn’t be rented out as an income.
Types of equity release
Lifetime mortgages are the primary type of equity release. They come in many forms and are not the only equity-release product. The differences between the different types of lifetime mortgages are determined mainly by how easy you can access your tax-free cash and how much interest is paid.
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Lifetime Mortgages
These are the main types of life mortgages:
- Roll up: Withdraw money in one lump sum with no monthly payments. The term will see interest accrue, but it will be paid at the end. This is usually when either the borrower or their partner (if it’s a jointly applied loan) dies or moves into long-term care.
- Drawdown This works the same way as a roll-up plan but allows you to withdraw money in monthly instalments. Only capital that you have drawn down is subject to interest.
- Flexible: While you can withdraw your equity in a lump sum, you are allowed to make voluntary repayments during the term to reduce the amount due at its end.
- Enhanced Only for customers with particular health conditions. This allows you to borrow more equity, often at a lower rate.
- Interest only: There are two options. One, you can pay off a portion of the accrued interest each month and have a smaller bill at the term’s end.
Home reversion plan
Home Reversion Plans are another form of the equity release plan. These products allow you to sell a portion or all of your home to a home-reversion provider. They usually charge between 20-60% and monthly instalments or a lump sum.
The property would be your co-owner, but you won’t have to rent any of the homes that are no longer yours. The reversion company receives its share of the proceeds when the property is sold.
The UK’s home reversion market is smaller than that of interest-only mortgages. Most retirement experts don’t recommend these products as you would have to sell your major asset and settle for less money than what your home is worth.
How can you release equity from your house?
This is a step-by-step guide to how to apply for equity release loans:
- Get professional advice. Equity release is not something to take lightly. It’s also a serious decision that you need to make. Contact us today, and we will match you with an equity release specialist for a no-obligation, free chat about your circumstances and needs.
- Fill out your application: Your equity release advisor will closely work with you to complete your application and offer customised advice before submitting it to the equity release provider. You will need to submit documents as proof of identity and proof of address at this stage.
- Legal, due diligence and valuation: Your advisor will contact your solicitor (they may recommend one if they don’t have one) to arrange a property valuation. After a successful valuation, your solicitor will start the legal paperwork.
Once these steps are completed, your solicitor will assign a completion date and make arrangements for you to claim equity release funds.
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How long does it take to complete the process?
You can expect to have your funds available within eight weeks for lifetime mortgages. Home reversion plans typically take 10 to 12 weeks to complete the equity release process.
Eligibility criteria
You must be at least 55 years old or 65 if you have a home reversion program. Providers prefer that you have paid off your mortgage and retain 100% equity in the property.
It is possible to get an equity release for existing mortgage debt. However, you will have to settle the outstanding mortgage balance as part of the agreement. The equity would generally be used to pay off the mortgage debt, and any money remaining would be deposited into your bank account.
If you are applying jointly, you must be at least 55.
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What equity release are you eligible for?
Many equity release providers limit the amount they offer to the property to between 20% and 50% of its market value. Some offer more than others, while others go lower.
Based on the following factors will determine the exact amount that you are eligible for.
- Your age The more equity you can typically release, the older you will be.
- Your health: Those with serious health problems may be eligible to receive more equity. You can qualify for more equity if you meet over 100 conditions. Talk to an expert to get a complete list.
- The value of your property: Providers will base their loan amount on the market value of your home. The property type may also be necessary as those with homes built differently than the norm won’t be eligible for equity release.
Minimum equity release amounts
Lenders will approve equity release applications only if the deal is valued at a specific amount. Although there is no standard limit, most providers will approve an equity release application if the deal is worth between £10,000 to £15,000. However, more prestigious schemes may set it at £100,000.
Another area where your home’s value can play a role is this: Most equity release providers won’t consider your application unless your home is worth at least £70,000.
What can you do to get out of an equity-release plan?
It is possible to withdraw an initial lump sum from an equity release plan. This can be expensive. While some lenders may levy early repayment fees, others may charge different amounts.
A lump sum, such as an inheritance, could be used to pay an equity release loan early. Another option is downsizing. Equity release plans will vary.
What lenders offer equity release?
The Equity Release Council restricts the number of lenders allowed to operate in this market, but the market is large and has many choices. The most prominent equity release providers are…
- Aviva
- Hodge Lifetime
- Liverpool Victoria
- Legal and general
- Bridgewater Equity Release
- Standard Life
- Scottish Widows
- All over the country
- You can also find the Equity Release Council’s complete list at
Be aware that not all equity release providers offer the same level of flexibility. Some providers provide greater flexibility than others, while some have strict restrictions about the capital you can release from your house.
Talking to an independent equity release advisor at Loan Corp is the best way to avoid lender-related pitfalls and find the best provider to offer you a deal.
They can assess your financial situation and help you locate an Equity Release Council’s approved lender that meets your requirements. Start your application online below:
What will it cost?
Equity release rates may be higher than for standard residential mortgages. The average interest rate for equity release is 5% at the time of writing. However, if you shop around, it might be possible to get a better deal. A mortgage broker can assist you with this.
You won’t usually have to pay interest or settle debt until the end, but additional costs and fees could be added.
- Valuation fees
- Application and administration fees
- Broker fees
- Legal costs
These may vary between providers, but you can contact us to get a breakdown of the deals you are eligible for.
Speak with our expert equity release advisors today
Equity release is a way to unlock capital that you have in your home to pay essential living expenses or to make your retirement more comfortable. However, it is not something you should take lightly.
We can get you approved for equity release; start your application online below.
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