What is equity release?

Equity release helps UK homeowners aged 55 and over access some of the money tied up in their home

Equity release is the combined name of two products, a lifetime mortgage or home reversion scheme which allow clients aged 55 and over to access the equity (tax free cash) tied up in their homes. With a lifetime mortgage, the most popular type of equity release, clients can choose to take the money released as a lump sum or after an initial release, in smaller amounts (drawdown). There are no affordability checks and the loan is usually repaid when the house is sold following their death or admission into long-term care. 

Changing perceptions

Equity release has evolved rapidly from a niche lending option for the elderly to become a competitive, mainstream later life planning option, a sector growing faster than any other in the mortgage industry.

Customer demand is driving innovative plan features

Modern lifetime mortgage plans are highly flexible and offer clients more options. From inheritance protection features that allow clients to protect a percentage of their home's future value for the benefit of loved ones, to plans that allow clients to pay off interest, make capital repayments without penalty and access flexible drawdown facilities. Rates are far more competitive than they used to be, and no-one is at risk of losing their home.

Identifying the right clients

The main motivations to release equity fall into four categories
home

Family aspirations

unsecured-debt

Freedom from debt

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Holistic financial planning

lifestyle

Lifestyle aspirations

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