Equity release – what is it?

What is equity release and is it right for you?

What is equity release?

Equity release lets you access some of the money that's tied up in your home. It can give you a tax-free lump sum that you can spend on numerous different things such as easing money worries, a holiday of a lifetime, a kitchen, funding care at home, improvements or alterations to your home – almost anything at all.

Should I use equity release?

Equity release isn't right for everyone. It depends on your circumstances, and there may be other products or courses of action that make more sense. Here are some things to think about:

  • Could you downsize?
    You could sell your property and downsize to a smaller, cheaper one. It may be a difficult decision emotionally, but it could be very practical.
  • Could you get a ‘standard’ mortgage?
    Your age and income would probably be the deciding factors, and of course it’s important to think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
  • Could you get a local authority grant?
    If you’re thinking about equity release for home repairs or heating improvements, then it’s worth checking to see if your local authority offers grants or loans.
  • Could you simply borrow money from elsewhere?
    It may not be easy, but could you ask a relative or close friend to lend you the money?
  • Could you rent a room out?
    If a small, regular income would do the trick, then you could earn up to £7,500 per annum free of tax through the Rent a Room Scheme.  

And of course, it’s important to make sure you’re getting all the income and benefits you're entitled to as well. To find out, why not take a look at the benefits and allowances section.

Am I eligible for equity release?

Different equity release providers have different criteria they apply when assessing if a customer can take out equity release – however, in the main, you may be eligible for equity release if:

  • You are a homeowner in England, Scotland, Wales or Northern Ireland
  • Your property is worth £70,000 or more
  • You are aged 55 and over

Who should I talk to about equity release?

Equity release may not be right for everyone. It may affect your entitlement to state benefits and will reduce the value of your estate.

Deciding to release equity is an important decision, and it’s essential you find the product that’s right for you. We would always recommend you seek professional financial advice.

Don’t have an adviser? You can find one by visiting thepfs.org or unbiased.co.uk.

Alternatively, HUB Financial Solutionspart of the Just Groupoffers an equity release advice service that could help you decide if equity release is right for you.

Find out with HUB Financial Solutions.