Frequently asked questions
What is Equity Release?
Equity release allows homeowners aged 55 or over to access the built-up value (equity) in their property as a tax-free lump sum or income stream. The funds can be used for any purpose. Lifetime mortgages, the most common option, accrue interest over time. This loan is repaid through the sale of the property when you pass away or move into long-term care. A new style equity release scheme is now available to borrowers aged 50 with provable income. Equity release plans are available for purchasing a new home as well as releasing equity in a current home.
Should I involve my family?
Yes, discussing equity release with your family is crucial as it impacts their inheritance. Consider having them present at meetings.
Do I need a good credit score?
No, equity release doesn't require a good credit history. However, a poor credit record might limit your plan options. We can still find suitable plans based on your situation.
Who are CompareRelease.com?
We're an independent specialist equity release brokerage, head office in Gloucestershire but working nationally. We're not a lender or restricted to using only specific lenders so our advisors can search the entire market to find the best plan for your needs.
Do I need financial advice for equity release?
The Financial Conduct Authority (FCA) requires that all equity release sales are advised.
How is my property valued?
A local independent valuer assesses your property's market value and suitability to determine your borrowing limit. The valuation report forms the basis of your lifetime mortgage offer, outlining the plan's terms.
Am I eligible for Equity Release?
To qualify for equity release, the youngest homeowner on the title deeds must be at least 55 years old (lifetime mortgages) or 65 years old (home reversion plans). There are minimum property values for equity release plans with each lender and currently £70,000 is the norm.
Can I switch my existing plan early?
Potentially. We analyse your situation to see if switching benefits you, considering:
- Lower interest rates: Save on long-term interest.
- Borrowing more: Access additional funds if your current lender doesn't allow it.
- New features: Gain access to features unavailable in your current plan.
Early repayment charges may apply.
How much can I release?
It depends on your age, property value, and health. Release only what you need initially, as interest accrues on the borrowed amount. Most lenders offer drawdown plans for future withdrawals.
How long does the process take?
The process typically takes 4-6 weeks, depending on property type, lender, valuer, solicitor, and advisor involvement. We streamline this with experienced personnel.
What are enhanced lifetime mortgages?
These plans consider your health (poor health which affects life expectancy May equate to potentially higher loan amount or lower interest rate).
Can I have equity release with an existing mortgage?
Yes, but you must use the released funds to pay off your existing mortgage first. Equity release becomes the sole charge on your property.
Can I use equity release on rental properties or vacation homes?
No, equity release mortgages are designed for the home you live in. Occasionally, one particular lender enters the market for second homes/rental properties but has not done so in recent years.
Can I make interest payments?
Yes, some plans are designed for borrowers to make a commitment to service the monthly interest, whether in full or in part. Often these plans offer discounts on their interest rates instead, some plans only allow voluntary payments but with the flexibility for these to be regular or irregular
Can I make partial repayments?
Yes, with some plans a partial reduction in the mortgage balance is allowed without penalty, usually restricted to 10% a year of the outstanding balance.
What about early repayment charges (ERC)?
There are two types of Early Repayment Charge, defined and gilt based.
With a defined ERC, you know from the beginning what the ERC would be as it based on a percentage of the loan amount. The ERC normally reduces over a set period. After the end of the set period, there is no ERC.
A gilt-based ERC is linked to changes in financial instruments such as gilt yields. With this type of plan, the ERC can range from £0 up to 25% of the amount borrowed and the amount depends on whether the yield is higher or lower when the loan is repaid, than it was on the completion date of the loan.
These days most lender are only offering defined ERCs.
Equity release plans are designed with to waive early repayment charges (ERCs) in specific life circumstances such as the borrower dying or going into long term care.
With a defined ERC, you know from the beginning what the ERC would be as it based on a percentage of the loan amount. The ERC normally reduces over a set period. After the end of the set period, there is no ERC.
A gilt-based ERC is linked to changes in financial instruments such as gilt yields. With this type of plan, the ERC can range from £0 up to 25% of the amount borrowed and the amount depends on whether the yield is higher or lower when the loan is repaid, than it was on the completion date of the loan.
These days most lender are only offering defined ERCs.
Equity release plans are designed with to waive early repayment charges (ERCs) in specific life circumstances such as the borrower dying or going into long term care.
Will equity release affect my inheritance I leave behind?
Yes, it reduces the estate value passed to your beneficiaries. The impact depends on:
- Equity Release: This refers to any financial product that lets you borrow money secured against your home's value, without having to pay interest (unless you want to) whilst retaining ownership.
- Home Reversion Plans: These plans differ from equity release. You sell part or all of your home's equity for a lump sum, income stream, or both. There's no interest charged, but the sale portion reduces the proceeds you receive when your property is eventually sold. You retain the right to live in your home for life.
- Lifetime Mortgages: A long-term mortgage with no end date until you die or go into long term care. Equity Release Mortgages, Home Reversion Plans and Retirement Interest Only mortgages all offer these benefits
All our recommended lifetime mortgages come with a "no negative equity guarantee," ensuring your beneficiaries won't owe money on your property.
Do I still own my home with equity release?
Yes, with a lifetime mortgage, you retain full ownership and any property value increase. Home reversion plans reduce ownership based on the sold portion, but you retain lifetime residency (usually rent-free).
Can I move with equity release?
Most Equity Release Council lenders allow transferring your plan to a new property that meets their criteria and value requirements. Speak to an advisor for a case-by-case assessment.
Does equity release affect benefits?
Yes, it might impact means-tested benefits like pension credit. We assess your situation and explain potential implications before recommending a plan.
Can someone else live in the house?
Spouses or partners who are usually joint borrowers (and stay after your passing or going into long term care). Any others adult occupants must be notified to the lender and sign adult occupancy forms (waiving their rights to remain in the property when the mortgage ends).
What happens when I die or need long-term care?
When the last survivor vacates the property, it is sold to repay the loan (interest accrues until then). Executors manage the process.
What are the fees involved?
We offer a free initial consultation, but our advice fee applies if you proceed with an application (see fees and charges page). Lenders may charge valuation, application, and legal fees. We can often help minimise these costs with free valuations and cashback incentives. Use our compare deals tool for details.
Can I borrow more money with an existing plan?
Maybe. It depends on your plan terms, outstanding balance, age, and property value. We assess this and offer alternative plans if needed.
Who can advise me on equity release?
Only financial advisors with specific qualifications can offer such advice. The Equity Release Council website lists qualified advisors, and all our advisors at CompareRelease.com hold these qualifications and are council members.
Equity Release jargon explained
Equity Release jargon explained
- Whether you have chosen to include a guaranteed inheritance protection (most people don’t as the guarantee limits how much can be released)
- Payment options: Choosing payment features like interest-servicing payments, voluntary regular or lump sums, overpayments
- Borrowed amount: Borrowing more reduces the inheritance.