Let’s look at the finer details when deciding to release equity against your home after retirement.

How Do I Find a Lender for Equity Release?

Your first order would be to find a broker listed with the Equity Release Council (ERC). For the best equity release providers, you must ensure that you get all the details upfront when you make your enquiries.

The contract’s fine print should also include all transactional fees. Verifying the company has a “no negative equity” policy to prevent your loan amount from exceeding the value of your home.

How Equity Release Works & Risks Involved

Equity release is the process of unlocking funds tied to your property. The process allows the homeowner to access money from the property while still living in the house, provided that they meet the age and financial criteria.

Between 2.5 – 6% is charged for the loan, with up to 60% charged if the loan is a home reversion.

A surveyor will be required to do an evaluation report. The information would include the current value, rates and the mortgage.

Once approved, a solicitor will need to be present for the homeowner’s signature to confirm their agreement to have funds released.

What Should I Know About Equity Release Plans?

Aaron Page gives insight into the requirements and the two types of mortgage plans and the steps you need to take to decide which is best for you.

There are lifetime mortgages and home reversion, and his article covers the difference between the two and which one would be best suited for each individual.

It is good to know that even with this information, you would still need to enlist the help of the correct broker to suit your individual needs.

What’s the Cheapest Way to Release Equity in Your Property?

Choose a lifetime mortgage, releasing equity interest over a more extended period. Home reversion plans increase immediately after release, but a lifetime mortgage grows steadily over several years.

A standard homeowner of 65 years would pay 3.12% on a flat roof extension where the reversion rate could take up to 60% of the property value. Consult with a broker to revisit all options before settling.

When Is the Best Time to Get an Equity Release?

You would have to age 55 to qualify for equity release. The outstanding amount on your home or property would also play a key role in the amount you can get.

You could still live in the house once you qualify. It is a great way to supplement your retirement income safely.

You must be a resident of the UK and the primary resident of the property and should expect an eight week waiting period for when you will receive your funds.

5 Things to Consider Before Settling for Equity Release With a Partner

  • You will both need to qualify for the minimum age requirement.
  • It could affect your children’s inheritance due to the property value decreasing.
  • You could miss out on a house price increase in future if you decide to apply for a home reversion equity release.
  • The amount you release could be affected if you decide to apply for the release together.
  • You could have a lump sum to spend immediately or have an income paid to you as a monthly wage.

It is vital to acknowledge the positive and negative effects of equality release on property value if you have children.

The inheritance tax will be affected when the property value drops. Your equity release lender will be able to advise you on options.

What’s Next?

Equity release lenders provide you with the most accurate information regarding the release of funds from your property. Finding a broker and a company that works for you will ultimately depend on your desired outcome.

Making an informed decision is the first step to securing your finances and property. Get a quote from a few registered companies and compare the rates and fees they offer before deciding on a final broker.

The more forthcoming they are with information, the better your chance of securing a plan that works for you in the future.