Your guide to Equity Release Mortgages

Over the course of a lifetime, we invest a huge proportion of our income into our homes. Even more so since house prices have increased by more than 70% over the past decade, as data published by Statista shows.

Equity release is a way of accessing the cash you’ve invested in your home over the years.

In this guide, we’ll explain what they are, how they work, and more.

What is an equity release?

An equity release is a type of financial product that lets you access the equity or value tied up in your home. This allows you to free up a sum of money that you wouldn’t have access to otherwise.

It’s an increasingly popular financial product. In fact, data released by the Equity Release Council showed that, on average, older homeowners took out 200+ equity release plans per day between April and June 2022.

How does an equity release work?

How an equity release works exactly depends on the provider and product you choose. There are equity release products that give you your money as one big lump sum and others that give you a series of smaller lump sums.

Whichever type of equity release products you choose, the exact amount you can claim is based on your age and how much your house is worth.

Who can use an equity release?

Equity release mortgages are for people over the age of 55. These products are designed to help people older citizens unlock some of the cash that they’ve invested in their homes over the years.

What can you use an equity release for?

If you choose to use an equity release mortgage, you can use the money you unlock to help you manage your finances in whatever way you need.

Many people who take out an equity release use their money to cover major purchases and expenses, such as:

• Carrying out home improvements
• Helping loved ones
• Clearing debts
• Going on the holiday of a lifetime
• Supplementing retirement income

Ultimately, what you use it for will depend on your individual circumstances, including any challenges you face and goals that you want to achieve.

What are the pros and cons of equity release?

Like most financial products, equity release has its pros and cons. Read through the points below to get a clearer idea of whether it could be a viable option for you.

Pros

• You get quick access to cash
• You have access to flexible withdrawal options
• Any provider registered with the Equity Release Council must ensure that you can still live in your home until you die

Cons

• Some of your estate will go to the equity release provider when you die
• You will need to pay some upfront costs, such as valuation fees, legal fees, financial advice, and more
• You have to be above the age of 55 to use this product