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Home Reversion Plan

What is a Home Equity Release Loan?

Equity release is a way of releasing the monetary value tied up in your property without the need to move. You can continue to live in your home for as long necessary. With equity release, you can either borrow against the value of your home or sell all or part of it for a regular income, a one-off sum, or the facility to get at equity as and when you like or a flexible combination.

Can I release equity if I have not yet paid my mortgage?

If you still have an outstanding mortgage on your property you will need to pay it off in full, however you can do this by either using some of the money from the equity you release or from other funds you may have. Once your mortgage is paid the rest of the money you release can be spent in any way you like.

What types of equity release are there?

There are two main types of equity release plan on the market – Lifetime Mortgages and Home Reversion Plans. Both are regulated by the FSA and are covered by the remit of the Equity Release Council Code of Conduct. For more information about what Lifetime Mortgages and Home Reversion Plans are, please see Equity Release Plans on the Equity Release Councils website.

How do I go about setting up an equity release plan?

It is important to explore all the options that could meet your financial needs before choosing an equity release plan. You can find information from the Money Advice Service which issues a useful guide – Equity Release Schemes.

Is equity release right for me?

Equity release plans are not always the best option for everyone. It is important that you fully consider your options and you should seek independent financial advice before making a decision. It is also important that, if you do decide to use an equity release product, you choose one that meets your needs. Remember that taking an equity release plan is normally a long term option. However, there are flexible options available. Use our quick quote form now to find out what options are available to you and find those that fit your varying needs. Some will even allow you to repay in the future without any penalties.
Please note: A financial adviser can help you to choose the plan that is right for you. Our brokers will advise you if you are in any doubt. We are here to help you make the right choice.

What impact will it have on my family?

Taking out an equity release plan could leave your family with little or nothing to inherit from your property when you die. You and your family need to feel comfortable with this possible outcome. You may be considering releasing equity from your home to help younger family members get on to the property ladder or pay for school fees etc.  In which case the implications of releasing the equity now and not having it to release later need to be considered. It may be worth including your family in any discussions you have with your financial adviser or your solicitor.

Have more Questions?

Take a look at our FAQs page to find out all about Home Equity Plans, Reverse Mortgages or Home Reversion Schemes!

FAQS about Home Equity Loans

How old do I need to be?

To qualify for a Lifetime Mortgage you need to be aged 55 and over. If you are taking out the plan with your partner, then the age of the youngest borrower must be at least 55. For a Home Reversion Plan you must be a minimum of 60 years old.

What impact will it have on my family?

Taking out an equity release plan could leave your family with little or nothing to inherit from your property when you die. You and your family need to feel comfortable with this possible outcome. You may be considering releasing equity from your home to help younger family members get on to the property ladder or pay for school fees etc.  In which case the implications of releasing the equity now and not having it to release later need to be considered. It may be worth including your family in any discussions you have with your financial adviser or your solicitor.

What happens if I live with someone else?

If you are married, in a civil partnership or living with someone as a partner and you are both eligible by age, you can take out a joint equity release plan. Your spouse or partner will then have the right to live in the property for as long as they wish, should you pass away or move into long-term care. If you have a friend or tenant living in your home the provider will want to make sure that they have no rights to continue to live there when you move out or pass away.

What happens if I want to repay the loan early?

If you repay a Lifetime Mortgage early you may be liable for extra charges called Early Redemption Charges. These can be quite expensive. Most equity release plans are intended as long term options. You ensure you inform your adviser at the time of taking out the plan if you think you might want to repay your loan early. There are products available with specific periods of early repayment penalties, some products which have no such penalties and some products which have early redemption penalties that stretch for a pre-determined time such as 5 to 10 years. If you have a Home Reversion Plan and want to pay off the loan early you may have to sell the property to pay off the outstanding due amount. You may find that you have too little money to purchase another property. However Equity Release Council Home Reversion Plans are portable to new acceptable properties and you may find that this is the best option for you.

What happens to my partner if I die?

If your plan is in joint names, then your partner will be able to continue to live in the property under the same terms. If it is in your name only, then unless the mortgage can be paid in full the property will have to be sold and your partner will have to find somewhere else to live. It is normally a requirement that the plans are written in joint names from the outset to ensure that both parties have security of tenure. In the case of re-marriage or co-habitation after a plan has been taken, you must inform your provider. It may not be possible to add your new partner to the plan, in which case they will not have security of tenure.