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Equity Release is a means of using the value of your home to receive either a lump sum of cash or regular monthly instalments. In all instances, age is the primary factor in determining the percentage of the value of your home that can be released.

A person of an older age can release a higher percentage of the value of their home, than a person of a younger age, as they are not expected to live as long.

There is no maximum age limit for equity release, although applications are not usually granted for anyone under the age of sixty.

Important factors to consider

  • Equity release, lifetime mortgages and home reversion plans are regulated by the Financial Conduct Authority

  • When choosing an equity release plan, ensure that it has non negative equity guarantee. This means that the debt can never exceed the value of the property. This will ensure that any outstanding debt, after the sale of your property will not be passed on to your next of kin

  • Not all lenders will allow you to move home after you have taken out an equity release plan

  • If you are living with a partner, you must take out a joint plan to ensure that the debt will only be reclaimed after the death, or admittance into long term care, of the last surviving partner

  • There are a number of hidden charges, such as; legal fees (as a solicitor is needed to set up the equity release plan), you will be charged for the surveying of your property. There are also charges for the setting up, maintenance and redemption of the loan.

  • You are advised to use lenders under Safe Home Income Plans (SHIP). SHIP is an industry body set up to promote safe equity release schemes. Companies who are members provide a number of guarantees, including: you will have the right to live in your property for life; the freedom to move to an alternative property without penalties; and that you will never owe more than the value of your home.

You should be aware that:

  • A cash lump sum or income from an equity release scheme may reduce the borrower’s eligibility to state benefits

  • An equity release scheme will reduce the value of the borrower’s estate and may leave nothing to pass on as an inheritance!