Many retirees discover they are less financially secure than anticipated.
According to a report by the Joseph Rowntree Foundation, more than two million pensioners in the United Kingdom live in poverty.
Releasing equity is one option for homeowners that can provide a much-needed financial boost. But does equity release make sense?
Let’s look more closely at what it entails.
Equity release is the process of accessing your home’s equity without selling it. This is possible via various products, such as lifetime mortgages, home reversion plans, and drawdown plans.
Equity release is typically available to those 55 and older, although some providers may impose a higher age restriction.
The Equity Release Council projects a 35% increase in the number of plans taken out since 2020.
This is likely due to the current economic climate, in which many retirees struggle to make ends meet due to low-interest rates and rising living expenses.
Equity release can provide retirees with a much-needed financial boost. For many, their home is their largest asset, and tapping into its equity can provide a regular income or lump sum to supplement their retirement income.
Releasing equity can provide homeowners with a lump sum of cash or a steady income stream that can be used for various purposes, such as home improvement or travel.
Typically, the cash received from equity release is tax-free, which can reduce the overall tax burden during retirement.
Equity release products can provide financial control and flexibility regarding utilising funds. This can assist seniors in maintaining their lifestyle and autonomy.
Equity release enables property owners to access their equity without selling their home. This can provide a much-needed financial boost without requiring relocation.
Numerous equity release providers offer a free equity release calculator that estimates how much you could release from your home.
Watch Martin Lewis’ thoughts on it.
Here are some important tisks that you consider. An equity release adviser will be able to explain these to you in more detail.
The amount of inheritance property wealth that can be passed on to family members can be diminished by equity release. Homeowners should thoroughly consider the impact of equity release on estate planning.
Typical lifetime mortgages include a fixed interest rate or a cap on the amount of interest that can be charged. However, if interest rates rise significantly, this can increase debt and diminish future financial resources.
Equity release can affect your eligibility for government benefits, such as the state pension. This is because a reduction in mortgage payments can affect the amount of income considered when determining benefit eligibility.
Equity release can diminish the amount of equity available to elderly homeowners. This can affect their ability to fund other endeavours, such as long-term care or charitable bequests.
A lifetime mortgage is a loan secured by the value of the borrower’s home. The loan is repaid, along with any accrued interest, when the property is sold.
Homeowners with lifetime mortgages can receive a lump sum or a regular income, and interest rates can be fixed or variable. This is a popular option for property owners who wish to release equity while retaining ownership.
A home reversion plan involves selling a portion of your property in exchange for a lump sum of cash or a regular income. When the property is sold, the provider receives a part of the proceeds as co-owner.
Home reversion plans can provide a larger percentage of the property’s value up front, but when the property is sold, the homeowner will not receive the full market value.
A drawdown plan allows homeowners to release cash as needed, rather than withdrawing a lump sum at the beginning of the plan. This option is viable for those who desire flexibility in their equity release funds’ application.
Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements.
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All equity release and mortgage advice is provided by Boon Brokers Limited, which is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.
If you take out a product with Boon Brokers, we will receive a fee for introducing you to them. Boon Brokers provides advice for free and without obligation. By contacting Boon Brokers through us, the cost of any equity release product would be the same as if you had contacted them directly.
The fee we receive is used to help keep this site operational and to produce new content.
Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Equity release schemes are governed by the Financial Conduct Authority (FCA) and must be offered by Equity Release Council member firms.
Council members must adhere to a strict code of conduct, providing homeowners protection and peace of mind.
Equity release can provide retirees with a much-needed financial boost. With pension savings and returns on savings at an all-time low, homeowners may look to home equity for a more comfortable retirement. Equity release can provide a steady stream of income or a lump sum that can be used to supplement retirement income and provide financial security.
Equity release can provide homeowners with a lump sum of cash or a steady stream of income that can be used for various purposes, such as home improvement or travel. This can allow retirees to enjoy their golden years to the fullest.
Typically, the cash received from equity release is tax-free, which can reduce the overall tax burden during retirement. To ensure that the tax implications of equity release are fully understood, it is essential to seek independent financial advice.
Equity release products can provide financial control and flexibility regarding how funds are utilised. This can help retirees maintain their lifestyle and independence, in addition to giving them the means to cover unexpected expenses.
The amount of inheritance that can be passed on to family members can be diminished by equity release. This is because the released equity is typically repaid when the property is sold, thereby decreasing the estate’s total value.
Homeowners must carefully consider the implications of equity release for their estate planning.
Lifetime mortgage interest rates can be fixed or variable. If interest rates rise significantly, this can increase debt and diminish future financial resources. Homeowners should seek independent financial advice to ensure they fully comprehend the risks associated with equity release.
Equity release can affect your eligibility for government benefits, such as the state pension. This is because a reduction in mortgage payments can affect the amount of income considered when determining benefit eligibility.
Homeowners should carefully consider how equity release will affect their eligibility for government benefits.
Providers and advisors of equity release play a crucial role in guiding homeowners through the equity release process. Providers offer a variety of products, including lifetime mortgages and home reversion plans. In contrast, advisers offer independent financial advice and can assist homeowners in locating the most suitable product for their needs.
The Equity Release Council is the UK equity release industry trade association. Council members must adhere to a strict code of conduct, which includes providing a guarantee against negative equity.
This ensures that homeowners will never owe more than their property is worth, even if property values decline.
Costs associated with equity release include legal fees, survey fees, early repayment charges, and arrangement fees. Before making a decision, homeowners must thoroughly understand all costs associated with equity release. Early repayment fees may also apply if the equity release plan is repaid prior to the term’s conclusion.
Equity release may affect means-tested benefits such as pension credit and council tax reduction.
It is essential for homeowners to seek independent financial advice to comprehend the effects of equity release on their eligibility for government benefits. Equity release may also affect inheritance tax, so homeowners should seek professional guidance to ensure their estate planning is current.
Homeowners can retain ownership of their property through equity release, but they must agree to repay the loan when the property is sold.
The provider becomes a co-owner of the property in the case of a home reversion plan. Homeowners should carefully consider how equity release will affect their home ownership.
Equity release is a viable option for retirees seeking to supplement their retirement income, finance home improvements, or finance travel. However, homeowners must fully comprehend the risks associated with equity releases, such as the impact on inheritance rights and entitlements, interest rates, and means-tested benefits.
Before deciding, homeowners should seek independent financial advice and consider all equity release costs carefully. By doing so, homeowners can determine if equity release is a viable option for them.
Before deciding, homeowners should be aware of the downsides of equity release. One of the primary disadvantages is the cost, which includes equity release scheme fees, financial adviser fees, legal fees, and arrangement fees.
If homeowners decide to repay the loan before the end of the term, they may incur early repayment fees, which can be an added expense.
In addition, the interest on the equity release loan is compounded over time, which can significantly increase the amount owed. Additionally, homeowners may be required to pay interest on the equity release loan, which can reduce their future financial resources.
Depending on the equity release product and the interest rate, the amount of interest paid on equity release can vary.
Homeowners should seek independent financial advice to ensure they understand the equity release product’s interest rates and the amount of equity that can be released.
With equity release, homeowners may not lose money, but they may not receive the full market value of their property when it is sold. This is because the released equity and any accrued interest are repaid when the property is sold.
Additionally, homeowners may be required to pay fees related to the equity release scheme, such as financial adviser, legal, and arrangement fees.
Moreover, the amount owed can increase over time due to compound interest, impacting the amount of cash released. Before making a decision, homeowners should carefully consider the equity release scheme’s cost and all associated costs.
Additionally, seeking independent financial advice and understanding the impact of equity release on your property value, prices and wealth is essential.
Depending on the equity release product and the interest rate, the amount of interest paid on equity release can vary.
Interest rates may be variable or fixed and may be higher than standard mortgage rates. Compound interest means that the amount owed can increase substantially over time, thereby reducing the amount of future funds available.
Homeowners should also consider the monthly repayments and their ability to pay interest to ensure the equity release program’s viability.
A free equity release calculator can be provided by the equity release provider or advisor to assist homeowners in determining how much interest they may be required to pay and how much cash can be released.
Before deciding, homeowners should know the equity release’s numerous restrictions.
One disadvantage is the price, which includes equity release scheme fees, financial adviser fees, legal fees, and arrangement fees. Additionally, homeowners may be required to pay interest on the equity release loan, which can reduce their future financial resources.
The amount owed may also increase over time due to compound interest, and early repayment fees may apply if the loan is repaid before the end of the term.
In addition, homeowners may not receive the full market value of their property when it is sold, and they may risk releasing cash tied to their property, meaning the lender owns a portion of it.
Additionally, homeowners should seek independent legal counsel to understand the legal ramifications of equity release and the potential impact on inheritance tax.
Equity release can impact certain means-tested benefits, such as pension credit and council tax reduction. This is because the money released as equity is typically regarded as capital and can affect the amount of income considered when determining benefit eligibility.
In addition, reducing mortgage payments through equity release may impact eligibility for state pension and other benefits. Homeowners should seek independent financial advice to understand the effects of equity release on their benefits eligibility.
Here are some important questions you are likely to want the answers too.
The role of an independent financial adviser and advisor in guiding homeowners through the equity release process is crucial. They provide impartial financial advice and can help homeowners locate the most suitable product for their needs.
Homeowners must select Financial Conduct Authority-regulated, qualified financial advisers (FCA).
The amount of equity that can be released is contingent on several variables, including the value of your home, your age, and the type of equity release plan chosen. The equity release provider or advisor will provide a free equity release calculator for homeowners to estimate the amount of equity they could release from their home.
The equity release costs include legal, survey, and arrangement fees. Before making a decision, homeowners must comprehensively understand all equity release costs.
Additionally, early repayment fees may apply if the equity release plan is repaid before the end of the term.
Home reversion plans involve selling a portion of your property for a lump sum of money or a steady income. As a co-owner, the provider receives a portion of the sale proceeds when the property is sold.
Home reversion plans can provide a larger percentage of the property’s value up front, but the homeowner will not receive the full market value when the property is sold.
Equity release schemes require independent legal counsel to ensure homeowners understand the legal implications of equity release and protect their rights. Before committing to an equity release plan, homeowners should seek independent legal counsel.
Drawdown plans permit homeowners to release cash as needed instead of withdrawing a lump sum at the plan’s inception.
This option is viable for those who want flexibility in applying their equity release funds. Drawdown lifetime mortgages are one type of equity release plan that provides this degree of adaptability.
A decline in home prices can affect the amount of equity available to homeowners, which can impact their ability to finance other endeavours.
However, equity release programmes provide a negative equity guarantee that ensures homeowners will never owe more than their property is worth, even if property values decline.
Generally, the cash received from equity release is tax-free, reducing the overall retirement tax burden. To ensure that they fully comprehend the tax implications of equity release, homeowners should seek independent financial advice.
The value of your home plays a crucial role in determining how much equity can be released through an equity release scheme. The greater the home’s value, the more equity can be released.
Homeowners can use a free equity release calculator to estimate the amount of equity they could release from their homes.
A mortgage broker can assist homeowners in locating the equity release product that best meets their needs. They can offer impartial financial guidance and assist homeowners in comprehending the costs associated with equity release.
The table below shows you some of the best equity release rates, as at December 2023, for lifetime mortgages, from some of the leading equity release providers in the UK.
These rates may have changed since this table was updated and should be taken as indicative only. There may also be other providers not listed on this table that could offer better deals. In addition, the providers and products noted below may not be right for your particular circumstances. Therefore, we strongly recommend that you speak to an equity release adviser, who will be able to provide you with information on the latest rates, that are applicable to you.
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| Product Name | Interest Rate | Type of product | Offers |
|---|---|---|---|
| Just For You – J2.5 | 6.22% | Fixed | Free ValuationNo application fee |
| Just For You – J1 | 6.30% | Fixed | Free ValuationNo application fee |
| Premier Flexible Pearl | 6.43% | Fixed | Free Valuation |
| Premier Optional Payment Pearl | 6.43% | Fixed | Free Valuation |
| Horizon 240 Drawdown | 6.43% | Fixed | Free Valuation |
| Classic Drawdown Super Lite 2 | 6.47% | Fixed | Free Valuation |
| Horizon 260 Drawdown | 6.47% | Fixed | Free Valuation |
| Classic Elite Drawdown Super Lite 2 | 6.47% | Fixed | Free Valuation |
| Premier Flexible Pearl | 6.48% | Fixed | Free Valuation |
| Premier Optional Payment Pearl | 6.48% | Fixed | Free Valuation |
| Horizon 240 Drawdown Fee Free | 6.49% | Fixed | Free ValuationNo application fee |
| Classic Drawdown Super Lite 1 | 6.52% | Fixed | Free ValuationNo application fee |
| Premier Flexible Pearl | 6.52% | Fixed | Free Valuation |
| Premier Optional Payment Pearl | 6.52% | Fixed | Free Valuation |
| Classic Elite Drawdown Super Lite 1 | 6.52% | Fixed | Free ValuationNo application fee |
| Flexible Pearl | 6.53% | Fixed | Free Valuation |
| Optional Payment Pearl | 6.53% | Fixed | Free Valuation |
| Enhanced Lifestyle Flexible Option | 6.53% | Fixed | Free ValuationNo application fee |
| Horizon 260 Drawdown Fee Free | 6.55% | Fixed | Free ValuationNo application fee |
The equity release rates have been sourced from Equity Release Supermarket. These indicative rates and incentives may have changed since this article was last updated. Therefore, they should only be taken as a guide and we cannot guarantee their current accuracy. Please also note that we do not provide advice on or endorse any particular product listed here. The rate you are offered will depend on your individual circumstances and subject to lender approval. We recommend that you speak to an equity release advisor to see what the best options are for you.
If you take out a product with Age Partnership, we will receive a fee for introducing you to them. By contacting Age Partnership through us, the cost of any equity release product would be the same as if you had contacted them directly. The fee we received is used to help keep our site operational and to produce new content.
The adverts for Boon Brokers on this page have been signed off as a Financial Promotion by Boon Brokers Limited, to ensure that they are in compliance with Section 21 of FSMA. Boon Brokers Limited is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.
In some cases, it’s possible to remortgage your property in order to release money. This might be a better option if you have a low mortgage rate and would like to release a small amount of money.
If you have equity release, you can still sell your house, subject to the size of your outstanding loan and the value of the new property. A lifetime mortgage is a loan secured against your home, which can be transferred to your new property.
In most cases, yes. When you die, your assets will be valued for inheritance tax purposes and your beneficiaries will still have to pay inheritance tax.
Equity release can sometimes be a great way to free up some extra tax-free cash in retirement and unlocking money tied up in property. It is a safe option if you use a provider and independent adviser accredited by The Equity Release Council.
Unlike most equity release advisors, Boon Brokers do not charge any fees! Have a free consultation to see how they can help.
You can speak to Boon Brokers on the number below and discuss your options
0333 567 1607
Use the equity release calculator and see how much money you could receive.
You can book a call back from for an equity release specialist, who can call you when it's conveniant
All equity release advice is provided by Boon Brokers Limited, which is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.
If you take out a product with Boon Brokers, we will receive a fee for introducing you to them. Boon Brokers provides advice for free and without obligation. By contacting Boon Brokers through us, the cost of any equity release product would be the same as if you had contacted them directly.
The fee we receive is used to help keep this site operational and to produce new content.
Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
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